Tax Amnesty: Gov't to extend administrative period, but penalties to be paid on time.

[waarmstrong]

Dividends are, of course, taxable income, regardless of how used by the beneficiary; using dividends to purchase more stock in the company paying the dividend does not absolve the taxpayer from reporting the dividend as income and paying any associated tax. While the taxpayer may be obliged by some jurisdiction to report net worth, including the value of securities owned at the end of the tax period, any increase in the value is not income subject to tax until the securities are sold and the gain actually realized.

 

[Bad_azz]

Or tax office is miles and miles away... so I doubt we will be going to visit them.

 

[fastpitch17]

Or tax office is miles and miles away... so I doubt we will be going to visit them.

I think most people feel tge same way even if tge office is 100 meters away.

 

[dafluff]

I believe the property is an asset that needs to be reported and any increase in value declaired. There may be a tax for the initial value of the asset but any gains in value will not be taxed until those gains are realized when you sell it. Not sure on the original value of the property for tax reasons. Property tax is different.

Tax laws are some of the most confusing laws no matter what country you're in.

Dividends are, of course, taxable income, regardless of how used by the beneficiary; using dividends to purchase more stock in the company paying the dividend does not absolve the taxpayer from reporting the dividend as income and paying any associated tax. While the taxpayer may be obliged by some jurisdiction to report net worth, including the value of securities owned at the end of the tax period, any increase in the value is not income subject to tax until the securities are sold and the gain actually realized.

Both of the above is correct as far as I understand Indonesian tax law. For real estate you still need to report the value of your property in your tax returns, legally the NJOP or price paid at purchase (whichever is higher), but it is not necessary to submit an appraisal or corrected value every year, because an increase of value is not due to "penghasilan yang belum dikenakan pajak", and it is not reasonable to have it appraised every year. When/if you sell it, you will be assessed the tax on the sale value and that is the income tax you are due on that property.

Far as dividends of publicly traded stocks go, in Indonesia it is taxed automatically, and you should get a report from your broker. I imagine dividends abroad are also taxed at some point, so those too will not be "penghasilan yang belum dikenakan pajak".

 

[waarmstrong]

Both of the above is correct as far as I understand Indonesian tax law. For real estate you still need to report the value of your property in your tax returns, legally the NJOP or price paid at purchase (whichever is higher), but it is not necessary to submit an appraisal or corrected value every year, because an increase of value is not due to "penghasilan yang belum dikenakan pajak", and it is not reasonable to have it appraised every year. When/if you sell it, you will be assessed the tax on the sale value and that is the only tax you are due on that property.

Far as dividends of publicly traded stocks go, in Indonesia it is taxed automatically, and you should get a report from your broker. I imagine dividends abroad are also taxed at some point, so those too will not be "penghasilan yang belum dikenakan pajak".

I am pretty sure your comment refers to income tax; property taxes, minimal as they are in Indonesia, are due every year.

And yes, in the USA, dividend income is automatically reported to the IRS by the payer and the payee gets a form with the amount reported. If you enter a different amount on your tax return, you better have a good explanation for the difference.

As an aside, I understand (anecdotally) sales of residential property in Indonesia between private parties are almost universally reported at the NJOP value, regardless of what the actual purchase price happens to be. The incentives to "fudge" the numbers for both the buyer and seller are too great to resist, especially given that the risk of detection is small.

 

[dafluff]

I am pretty sure your comment refers to income tax; property taxes, minimal as they are in Indonesia, are due every year.

Correct, I edited my post to reflect that better.

As an aside, I understand (anecdotally) sales of residential property in Indonesia between private parties are almost universally reported at the NJOP value, regardless of what the actual purchase price happens to be. The incentives to "fudge" the numbers for both the buyer and seller are too great to resist, especially given that the risk of detection is small.

The government recently halved the tax on property sale via Peraturan Pemerintah Nomor 34 Tahun 2016. However, I expect stricter enforcement of the law will also follow.

 

[Davita]

The government recently halved the tax on property sale via Peraturan Pemerintah Nomor 34 Tahun 2016. However, I expect stricter enforcement of the law will also follow.

Well spotted dafluff...not aware of that PP. Re: ....

(1)	Besarnya Pajak Penghasilan dari pengalihan hak atas tanah dan/atau bangunan sebagaimana dimaksud dalam Pasal 1 ayat (1) huruf a adalah sebesar:
	a.	2,5% (dua koma lima persen) dari jumlah bruto nilai pengalihan hak atas tanah dan/atau bangunan selain pengalihan hak atas tanah dan/atau bangunan berupa Rumah Sederhana atau Rumah Susun Sederhana yang dilakukan oleh Wajib Pajak yang usaha pokoknya melakukan pengalihan hak atas tanah dan/atau bangunan;

However as my Indonesian is zero to zero + can you advise what is halved. Google translates that the 5% transfer tax is halved to 2.5% but not sure if that is the 'Transfer Tax' the buyer pays or the 'Land and Building Transfer Duty" the seller pays.

My interest is because we are waiting for a buyer (WNI) to make up his mind on buying our villa (Hak Milik) and if I can show he is saving on the tax....might hasten the deal a bit.

Thanks, anyway, for the heads up on the tax.

 

[dafluff]

Well spotted dafluff...not aware of that PP. Re: ....

(1)	Besarnya Pajak Penghasilan dari pengalihan hak atas tanah dan/atau bangunan sebagaimana dimaksud dalam Pasal 1 ayat (1) huruf a adalah sebesar:
	a.	2,5% (dua koma lima persen) dari jumlah bruto nilai pengalihan hak atas tanah dan/atau bangunan selain pengalihan hak atas tanah dan/atau bangunan berupa Rumah Sederhana atau Rumah Susun Sederhana yang dilakukan oleh Wajib Pajak yang usaha pokoknya melakukan pengalihan hak atas tanah dan/atau bangunan;

However as my Indonesian is zero to zero + can you advise what is halved. Google translates that the 5% transfer tax is halved to 2.5% but not sure if that is the 'Transfer Tax' the buyer pays or the 'Land and Building Transfer Duty" the seller pays.

My interest is because we are waiting for a buyer (WNI) to make up his mind on buying our villa (Hak Milik) and if I can show he is saving on the tax....might hasten the deal a bit.

Thanks, anyway, for the heads up on the tax.

It occurred to me that this could be of interest to many of our readers, so I have made its own topic here:

https://forum.expatindo.org/showthr...le-transfer-tax-halved-effective-08-Sept-2016

 

[Zavia]

*raises hand*
Question, if I started working(with kitas) in indonesia in 2015, signed a sales and purchcase agreeement for an apartment in 2013, which completed like earlier this month....
Do I have to declare it now, later or what?
And if my real property gain tax is already 20% if i sell it and indonesia and my country has a double taxation treaty... do i still declare its eventual sale and NOT pay tax?

 

[dafluff]

*raises hand*
Question, if I started working(with kitas) in indonesia in 2015, signed a sales and purchcase agreeement for an apartment in 2013, which completed like earlier this month....
Do I have to declare it now, later or what?
And if my real property gain tax is already 20% if i sell it and indonesia and my country has a double taxation treaty... do i still declare its eventual sale and NOT pay tax?

You declare it on the tax return of the year when the "sertifikat" is transferred into your name.

When you sell in Indonesia, the taxes are paid even before the property changes hands and is a "final" tax, as defined by Indonesia law. Income from things that are assessed "final" tax is not taxable income, so no further taxes due. You just update the tax return on the following year to reflect that the property is no longer yours (ie. update your asset declaration).

Not sure whether you can credit the taxes already paid to your home country's tax burden, and that probably depends on the country and tax treaty.

 

[jstar]

Of course the amnesty looks at the situation of 31 December 2015 but the period started in 1985. Anyway, one more day to go. Chaos at the tax office, they give two numbers; one outside and then another one once inside. Tomorrow must be hell; and it is a Friday! [/Handpalm]

The fear mongering has become very bad. Corrections (I.e. I forgot to mention something on my income tax form but it has no tax implication) are strongly discouraged -some even say forbidden- and it has become; "just pay 5%". That is a twisted and short sighted view and many people want to 'buy safety' by just reporting something.

There are many cases of people with land or investment products which they bought with legal savings and who have regular jobs and salaries (and who always paid their taxes). They are forced into an amnesty fine with the fear of having to pay 90% on the omitted items later. And to think that the state was not deprived of any income because of these (deliberate?) mistakes. Where I come from, it would rain law suits and the whole program would be declared illegal. But here?

 

[Davita]

The fear mongering has become very bad. Corrections (I.e. I forgot to mention something on my income tax form but it has no tax implication) are strongly discouraged -some even say forbidden- and it has become; "just pay 5%". That is a twisted and short sighted view and many people want to 'buy safety' by just reporting something.

There are many cases of people with land or investment products which they bought with legal savings and who have regular jobs and salaries (and who always paid their taxes). They are forced into an amnesty fine with the fear of having to pay 90% on the omitted items later. And to think that the state was not deprived of any income because of these (deliberate?) mistakes. Where I come from, it would rain law suits and the whole program would be declared illegal. But here?

Exactly so...even among many WNA I have this conversation with. Common sense went out the window and, because of legal confusion, they paid the 5% amnesty even when amnesty wasn't required as they had complied with every fiscal law. Their notaries (usually thru' ignorance....or maybe intent) recommended that.

 

[jstar]

So do the accountants and tax consultants. Still something that amazes me.