Hot Subject 2016 Sept - Tax Amnesty

[Bad_azz]

I don't have a TIN.

 

[Davita]

Our nominee is my wife's nephew and a Gov't employee. To make sure he is protected, under the law, we asked a tax adviser to look into his situation regarding owning our villa and declaring it as his asset.

As our nominee declares ALL his other assets/income on his SPT, except our villa, the tax adviser said we should apply for amnesty and pay the 2%. He said that the tax authority may see the money we provided to the notary to purchase the property (over 5 years ago) as a gift to our nominee... and he may have to pay tax on that money.
My wife got worried and acquiesced, to allay problems for our nephew, and told him to fix-it now, as it is close to the end of 1st phase, and send us the bill.

Indonesia doesn't have a Gift Tax nor Inheritance Tax nor a Wealth Tax.
The Amnesty only provides for 2% payback on funds 'repatriated' between July and Sept. Assets declared, and income generated, within Indonesia attracts 4%. The paperwork required for Amnesty has been extended to end of 2016.

I think this is a typical Indonesian solution...create a false situation and make people scared...then get people to pay for something that isn't required because we all know that there is no real justice if we go to court.

 

[dafluff]

Indonesia doesn't have a Gift Tax nor Inheritance Tax nor a Wealth Tax.

Indonesia does have a gift tax (well, the gift is counted as income, and PPh applies), except for gifts between direct vertical family members (ie. between parents and children). So unless your nominee is your child or parent, then they do have to pay taxes on gifts given to them.

Pasal 4 ayat (1) huruf d angka 4 UU PPh nomor 36 Tahun 2008.
Pasal 4

(1) Yang menjadi objek pajak adalah penghasilan, yaitu setiap tambahan kemampuan ekonomis yang diterima atau diperoleh Wajib Pajak, baik yang berasal dari Indonesia maupun dari luar Indonesia, yang dapat dipakai untuk konsumsi atau untuk menambah kekayaan Wajib Pajak yang bersangkutan, dengan nama dan dalam bentuk apa pun, termasuk:

4. keuntungan karena pengalihan harta berupa hibah, bantuan, atau sumbangan, kecuali yang diberikan kepada keluarga sedarah dalam garis keturunan lurus satu derajat....etc etc.

 

[Davita]

Re: post #123 by Dafluff

Thank you as it seems you are correct...I have the gov't translate of amendment 36 of 2008 to UU 7 of 1983.....
It does state that only gifts from one degree of lineal descent are excluded.

I was relying on information from websites like the one from ....

http://www.ey.com/Publication/vwLUAssets/Worldwide-Estate-and-Inheritance-Tax-Guide-2015/$FILE/Worldwide%20Estate%20and%20Inheritance%20Tax%

Which categorically states on page 146/147 that Indonesia has NO Gift Tax, Inheritance Tax or Wealth Tax.

and ASEAN BRIEFING which states.....

RELATED: Dezan Shira & Associates’ Tax and Compliance Services
Indonesia:
Indonesia does not levy inheritance tax. As long as there is no business or employment relationship, there is also no gift tax.

My wife is so anxious and stressed that we are proceeding with creating amnesty for her nephew so all's well...it's only money...

 

[dafluff]

Re: post #123 by Dafluff

Thank you as it seems you are correct...I have the gov't translate of amendment 36 of 2008 to UU 7 of 1983.....
It does state that only gifts from one degree of lineal descent are excluded.

I was relying on information from websites like the one from ....

http://www.ey.com/Publication/vwLUAssets/Worldwide-Estate-and-Inheritance-Tax-Guide-2015/$FILE/Worldwide%20Estate%20and%20Inheritance%20Tax%

Which categorically states on page 146/147 that Indonesia has NO Gift Tax, Inheritance Tax or Wealth Tax.

and ASEAN BRIEFING which states.....

RELATED: Dezan Shira & Associates’ Tax and Compliance Services
Indonesia:
Indonesia does not levy inheritance tax. As long as there is no business or employment relationship, there is also no gift tax.

My wife is so anxious and stressed that we are proceeding with creating amnesty for her nephew so all's well...it's only money...

Yep, as always, accurate information on just about anything in Indonesia is elusive...even when asking supposed professionals.

 

[Davita]

Yep, as always, accurate information on just about anything in Indonesia is elusive...even when asking supposed professionals.

You can say that again...OK! that's just rhetoric...I'm really tired of it....

FWIW here's the link to amendment 36/2008 translated.....http://www.expat.or.id/info/2008-IncomeTaxSDSN.pdf

 

[fastpitch17]

How to register and exchange tax info after amnesty

http://www.thejakartapost.com/acade...ster-and-exchange-tax-info-after-amnesty.html

Since the inception of the national tax amnesty program, the Automatic Exchange of Information (AEOI) has been mentioned by many parties as an instrument that can end global tax evasion. By having the AEOI mechanism in place, tax dodgers will no longer have a place to hide. That is the idea.
What is the AEOI actually? The Organization for Economic Co-operation and Development (OECD) describes the AEOI as a systematic and periodic transfer of taxpayers’ information from source countries to their residence countries. A source country is a country where a taxpayer receives income such as dividends, interest and others.

 

[mauricio]

He's probably just pushing the tax amnesty as he is told to do. Right now, the finance ministry is pushing really hard to meet targets as they have barely met 30% or so.

As an aside, I spoke to a long time friend who is a tax consultant. He told me that one of his clients, one of the biggest business family locally (think kids driving around in Lambos), paid approx Rp 500rb in tax last year. Their previous accountant even used the "Sangat Sederhana" tax form, which is the simplest form, for people making less than Rp 60 million. Now they are going to do the amnesty. This is by far the norm in Indonesia, so I think your AR just couldn't comprehend somebody actually paying their correct tax amount.

Kalla Group owned by the Vice President has enrolled for tax amnesty, his brother-in-law's Bosowa Group also joined. Does that mean they were not paying the correct tax amount all along?

 

[fastpitch17]

Kalla Group owned by the Vice President has enrolled for tax amnesty, his brother-in-law's Bosowa Group also joined. Does that mean they were not paying the correct tax amount all along?

If you come out publicly saying you are joining the Tax Amnesty to me that is just announcing you have been a tax dodger. Of course, nothing to worry about since there will be no investigations. Seems to be plenty of business people as well as a ton of government employees signing up not to mention of the the candidates for Jakarta Governor.

 

[jstar]

^
Yep, one of those infamous TII examples; no privacy and feeling of embarrassment. It even becomes a bit of gengsi in many cases; look at me, I am participating thus I am very succesful and got away with it.

Scandalous.

 

[dafluff]

Kalla Group owned by the Vice President has enrolled for tax amnesty, his brother-in-law's Bosowa Group also joined. Does that mean they were not paying the correct tax amount all along?

That seems like a reasonable conclusion.

 

[dafluff]

Some up-to-date statistics at the end of the first quarter of tax amnesty:

Participants: 366.768 tax payers.
Asset declaration: Rp 3.620 Trillion (2.532T domestic, 951T abroad, 137T repatriated)
Penalty collected: RP 97,2T

32 people paid penalties of over Rp 100B each, with combined wealth of Rp 496T
71 people paid penalties between Rp 50B to 100B, with combined wealth of Rp 172T
736 people paid penalties between Rp 10B to 50B, with combined wealth of Rp 520T

Overall, very good numbers, except for the repatriation realization, which was targeted for Rp 1.000T and only realized 13% of that. Now that the first quarter of amnesty is over, receipts are trickling in much slower as it is expected that most of the assets have been declared in the first, and most advantageous, quarter.

 

[Smallworld]

The Indonesian government needs a new strategy to revive its much-lauded tax amnesty program, which has been performing poorly in its second phase

incidents such as the anti-Ahok protest in Jakarta and the church bombing in Samarinda have made taxpayers hesitant in joining the tax amnesty program as they now think twice about keeping their assets in the country for the next three years

http://jakartaglobe.id/business/snail-paced-progress-tax-amnestys-second-term/

 

[fastpitch17]

I don't think you can blame the anti Ahok rally nor the church bombing. The second phase of the tax amnisty was reported early on before these actions of failing to get people involved but for the same reason. A lack of trust.

 

[Davita]

I don't think you can blame the anti Ahok rally nor the church bombing. The second phase of the tax amnisty was reported early on before these actions of failing to get people involved but for the same reason. A lack of trust.

With regard to repatriation from overseas I'd agree with FP17.
The principle reason for tax amnesty was to get those funds into RI to fund the investments in infrastructure etc. There is no doubt that part has failed in its objective. The by-product, which was not the main principle, is that many Indonesians who had NOT previously paid taxes on income saw a good way to avoid future criminal charge....and took the amnesty. Extra to this is those people are now registered for taxation, in the future, so that has been successful.

Gov't itself has to blame for not securing those overseas investors "or crooks" to trust that the system will not harm them...this needs to be addressed.

 

[dafluff]

With regard to repatriation from overseas I'd agree with FP17.
The principle reason for tax amnesty was to get those funds into RI to fund the investments in infrastructure etc. There is no doubt that part has failed in its objective. The by-product, which was not the main principle, is that many Indonesians who had NOT previously paid taxes on income saw a good way to avoid future criminal charge....and took the amnesty. Extra to this is those people are now registered for taxation, in the future, so that has been successful.

Gov't itself has to blame for not securing those overseas investors "or crooks" to trust that the system will not harm them...this needs to be addressed.

Agreed. As I mentioned earlier in this thread, there is almost no sane reason someone would want to bring in hard currency safely abroad to lock-in in Indonesian paper for 3 years, over a 2% penalty.

 

[jukung11]

A lot of the fear was the international information sharing regime coming. It would affect the players that were able to stash large sums off shore. Phase 2 was to target small and medium size businesses. I doubt they have as much stashed offshore, which would be less fear of getting caught.

 

[Davita]

I know that Singapore has joined the Foreign Account Compliance Act (FACTA) with USA but I seem to recall they also signed some deal to make account transparency available to the Indonesian Government by 2018.
If true.... maybe that will stimulate the amnesty repatriation prior to that date.

 

[jstar]

The question is of course when ASEAN will collaborate on this, and require banks to provide information to tax authorities on nationals of other member states...

[As they do in the EU now; the tax department of a country (can) know(s) which properties and bank accounts you have abroad]

 

[BAJakarta]

The question is of course when ASEAN will collaborate on this, and require banks to provide information to tax authorities on nationals of other member states...

[As they do in the EU now; the tax department of a country (can) know(s) which properties and bank accounts you have abroad]

For some of the ASEAN countries including Singapore, Indonesia and Malaysia, there is no need for ASEAN to compel them - they have already agreed to reporting under the global CRS program