Tax in the New Era

[Wally]

No, it was less than USD 10K. I think this must have been information sharing between governments.

 

[Helpful Herbert]

By the way the tax office also knew how much was in the account at the end of 2020

Well that definitely sounds like CRS, since the year end account balance is the only information that is provided.

It will be interesting to know what they say to you when you meet them.

If you inform them that these are life savings that you built up many years ago before moving to Indonesia it would be hard for them to charge you tax on it, although I'm sure they will try.

 

[Wally]

I moved the funds from the UK between 2017 and 2019 and can show proof of the transfers. I was registered for tax in Indonesia from January 2018. Before that I had been working for international aid organizations and not liable for Indonesian tax

 

[Wally]

I have now had a meeting with BADORA (foreign tax office) concerning the fact that I did not report my investment account in Singapore. They want me to pay RP. 2.3 billion (18% of the value of the investments).
I have explained that

• these amount to years of savings, were acquired from my salary tax paid over the years well before I was registered for tax in Indonesia and are to fund my retirement
• I have only been registered for tax in Indonesia since 2018 and am only a temporary resident on a KITAS
• I was never given any information or guidance about reporting foreign assests

 

[Helpful Herbert]

Not sure what to recommend but you should definitely get this decision from them in writing. If it is only verbal from a tax officer who is unwilling to issue a formal letter it is a shakedown, if it is in writing they have to reference the specific law or regulation, showing their calculation of the amount requested, and then you can consider how to proceed and whether you need to use a tax advisor (bearing in mind that will cost money too and might not change the result). In any case a tax advisor can't do much until there is something in writing.

Hopefully they don't ask you to pay a smaller amount to "make the problem go away" or similar, which is not unusual in certain govt bodies, and of course they'd be back for more later.

 

[Wally]

It wasn't a shakedown. She showed me the regulations and the exact calculation would come later. I have spoken to a tax adviser who also says that this is the law. The alternative is to revise my tax returns since 2018 and pay dividend and capital gains tax as required

 

[Helpful Herbert]

That's good to hear. Since you complete the SPT each year, allowing you to resubmit them to include the Singapore data (hopefully without penalty) seems like a good solution. I believe capital gains are taxable at the normal income tax rate, although I'm not sure if it is applicable if you haven't sold the investments yet (it wouldn't be in the UK).

 

[Wally]

Ah, Herbert, you are British too! Do you have a way I can contact you other than via the forum? I would like to share information that I would rather not share here

 

[dafluff]

I have now had a meeting with BADORA (foreign tax office) concerning the fact that I did not report my investment account in Singapore. They want me to pay RP. 2.3 billion (18% of the value of the investments).
I have explained that

• these amount to years of savings, were acquired from my salary tax paid over the years well before I was registered for tax in Indonesia and are to fund my retirement
• I have only been registered for tax in Indonesia since 2018 and am only a temporary resident on a KITAS
• I was never given any information or guidance about reporting foreign assests

The 18% rate refers to the Tax Amnesty currently in effect for undeclared assets abroad, that you are not repatriating in Indonesia. This is also the highest rate. For the benefit of others reading: there are lower rates if you meet certain conditions, down to 6% (must have participated in the previous tax amnesty, assets are in Indonesia or will be repatriated to Indonesia, and invested in approved instruments).

This is also the easiest way out. You do not have to prove anything about the assets, other than that they exist. You could have made all that money in Indonesia, not pay any taxes on it, and stashed it in Singapore all this time, and it wouldn't matter. Kinda nice of them to offer you this option.

But since that money was not earned in Indonesia, and was not taxable to begin with, you should check with your tax advisor to see if revising your income tax declaration going back to 2018 makes more sense (ie. is cheaper). You will be liable for any capital gain taxes (if any), interest income taxes, and penalties going back to 2018. But that is probably still a lower amount.

 

[Wally]

Do you know a good tax consultant/adivsor?

 

[dafluff]

Do you know a good tax consultant/adivsor?

Not really. But the task at hand does not need one. Just provide your current one with statements from this investment account dating back from when you became a tax resident of Indonesia. From there have him calculate any taxes on capital gains and interest income. Ask him to include penalties. See if that number makes sense to you. Then, and this is most important, have him and the tax office agree beforehand with whatever solution to take.

The tax guys have target numbers for their amnesty program, this is why you are given the "option" to participate in the amnesty. Also, it is the easiest option, for them, and for your tax consultant, which is probably why they would prefer you go that way. If you were already in an investigation for tax avoidance, you would not be able to go the amnesty route.

 

[Wally]

I don't have a tax consultant and my KITAS expires soon also and am thinking of returning to UK

 

[dafluff]

I don't have a tax consultant and my KITAS expires soon also and am thinking of returning to UK

Apologies, I gathered from post #26 that you have/had one. Best of luck with whatever you decide.

 

[Wally]

Apologies, I gathered from post #26 that you have/had one. Best of luck with whatever you decide.

Thanks, I've spoken to a couple of people. So I should be fixed up soon.