Finance, Accounting, Tax Planning, Tax Heaven

Stores that providing facilities for VAT refund to foreign tourists

2010-05-25T09:50:00.000+08:00

Directorate General of Taxation has appointed retail stores that will participate in the provision of refund of VAT to foreign tourists. For the initial phase of participating stores are:

No.	Store's name	Location
1.	Pasaraya Blok M	Blok M, Jakarta
2.	Sarinah	Jl. Thamrin, Jakarta
3.	Metro	Pondok Indah Mall, Jakarta
4.	Metro Plaza	Plaza Senayan, Jakarta
5.	Keris Gallery	Terminal 2D, Soekarno Hatta Airport, Jakarta
6.	Batik Keris	Discovery Shopping Mall, Bali
7.	UC Silver	Batu Bulan, Gianyar, Bali
8.	Mayang Bali	Kuta Square Blok A No. 12, Bali

Source : Directorate General of Taxation RI

How to attain IRS tax debt relief through professional assistance

2010-03-18T17:17:00.005+08:00

A lot of individuals and small business owners fall behind on their IRS tax payments. However, all of them don’t do it deliberately. There might be various reasons why they couldn’t pay their taxes on time. Their business might have become insolvent, they might have lost their jobs and postponed filing their returns or some might be innocent spouses who are uninformed about the actual condition.

You should remember that paying taxes is your responsibility and you can’t shrug it off. If you don’t do it, there are a number of negative consequences that you may have to face and these include the following:

* Wage garnishment
* Penalties
* Liens on your property

However, when you have piled up a huge amount of IRS tax debt no matter what the reason behind that is, you should look for professional tax debt management assistance.

Why should you go for professional tax debt management assistance?

When the IRS is imposing liens and penalties and threatening to garnish your wage, you should immediately talk to a tax professional to settle your IRS tax dues. A tax professional can offer you the correct advices and help you attain peace of mind. They know various techniques that you can use to pay off your IRS tax dues. The most common techniques are the following:

* Innocent spouse relief
* Offer in compromise
* Installment agreement
* Wage garnishment release
* Currently non-collectible status
* Penalty abatement

The goal of a professional tax settlement company is to help you clear your dues and drive away your anxieties. Once you go for their assistance, you don’t have to receive embarrassing communications from the Internal Revenue Service or bother about your wages being garnished.

A tax professional can simplify the entire procedure of settlement for you. With their skills and experience, they would bargain a settlement with Internal Revenue Service that you can manage to accomplish. You can stay away from penalties and wage garnishment before they occur. Professionals would talk terms with the IRS to assist you to handle your debt and arrive at a settlement so that you can have a better control over your finances.
So rather than wasting time, you should act immediately and look for a professional tax settlement company to get out of your IRS tax debt.

Prevention of Abuse of Tax Treaty (3)

2010-02-14T16:57:00.002+08:00

Not considered to misuse Tax Treaty / P3B :
a.	Individuals who act not as an agent or nominee;
b.	Institutions whose name is mentioned expressly in Tax Treaty or reply has been agreed by the authorities in Indonesia and in partner countries of Tax Treaty;
c.	Foreign Taxpayers accepts or obtains income through the Custodian in connection with the income from the transaction of stocks transfer or bonds are traded or reported in the capital market in Indonesia, other than interest and dividends, in terms of Foreign Taxpayers act not as agents or as a nominee;
d.	Companies whose shares are listed on the Capital Market and traded regularly;
e.	Bank; or
f.	Companies that requirements:
	1)	The establishment of companies in the Tax Treaty partner country or setting structure / scheme transaction is not solely intended for use Tax Treaty; and
	2)	the business activity is managed by a management itself that has sufficient authority to run the transaction; and
	3)	The company has employees; and
	4)	Have the current events or business; and
	5)	Income derived from Indonesia tax payable in recipient countries; and
	6)	Do not use more than 50% of the total income to meet obligations to other parties in the form, such as interest, royalties, or other rewards.
.
In case of abuse Tax Treaty:
a.	Withholding taxpayers is not allowed to apply the provisions stipulated in Tax Treaty and must cut taxes in accordance with the provisions stipulated in the Income Tax Act; and
b.	Foreign Taxpayers who do not abuse Tax Treaty can apply the tax refunds should not be payable.

Substance over form
In the event there is a difference between legal form a structure / scheme with its economic substance, then the tax treatment applied in accordance with applicable regulations based on economic substance (substance over form).

Settlement by mutual agreement
In the case of Foreign Taxpayers are not taxed on the basis of provisions stipulated in Tax Treaty, Foreign Taxpayers may request the competent authority in the country for settlement by mutual agreement (mutual agreement procedure) in accordance with the provisions stipulated in Tax Treaty.

Prevention of Abuse of Tax Treaty (2)

2010-02-14T16:28:00.009+08:00

Here are some pictures showing related to the abuse of Tax Treaty:
Picture 1 :	Transactions scheme that has no economic substance
Picture 2 :	Transactions with the structure/ scheme of legal format is different with its economic substance (Ship to Bill to)
Picture 3 :	Loan Transactions Scheme (Normally)
Picture 4 :	Loan Transactions Scheme Using Treaty Shoping
Picture 5 :	Conduit Company

Prevention of Abuse of Tax Treaty (1)

2009-11-18T08:57:00.002+08:00

Recently Directorate General of Taxation Republic Indonesia issued a very important regulatory practices related to taxation of economic transactions between countries (international taxation), which PER-62/PJ./2009 dated 5 November 2009 towards Prevention of Abuse of Avoidance of Double Taxation (Tax Treaty). This provision is very important to know by the taxpayers especially those with economic transactions between countries that have no tax problems on later.

But before discussing more about these conditions, it will be explained a bit about the terminology contained in these provisions in order to obtain the same perception for the reader.
1.	Foreign Taxpayers are foreign tax subjects, receiving and / or obtain income derived from Indonesia via PE / BUT in Indonesia.
2.	Agent (agent) is a person or entity acting as an intermediary reply and take action for and/ or on behalf of other parties.
3.	Nominee is a person or entity has a legally (legal owner) of a property and / or income for the benefit or under the mandate of the truth becomes the property owner and / or parties enjoy the benefits of truthfulness on income.
4.	Beneficial Owner / owner of the truth of the economic benefits of income is the income recipient:
	a.	Acting as no Agent;
	b.	To act not as a nominee; and
	c.	No Conduit Company (some firms benefit from a connection with the earnings P3B rather in other countries, while the economic benefits of such income possessed by the people in other countries will not be able to reply the right to use Tax Treaty/ P3B if such income is received directly).
5.	Domestic taxpayers are:
	a.	An individual residing in Indonesia for more than 183 (one hundred and eighty three) days within a period of 12 (twelve) months, or a private person in a fiscal year in Indonesia and have the intention to place live in Indonesia;
	b.	body established or domiciled in Indonesia, except for certain units of government agencies that meet the criteria:
		1)	formation based on the provisions of legislation;
		2)	funding sourced from the Budget or the State Budget of the Region;
		3)	acceptance included in the budget or the Central Government Local Government; or
		4)	books reviewed by the state functional monitoring .apparatus.

Abuse of Tax Treaty
Imposition of tax rates as stipulated in the tax treaty between Indonesia and partner countries will be ignored / not used in the event of abuse of the provisions of Tax Treaty by a taxpayers. Some abuse of Tax Treaty as mentioned in the new regulations are:
1.	Transaction has no economic substance is done by using structures / schemes in such a way with a view solely to benefit Tax Treaty / P3B;
2.	Transactions with the structure / scheme of legal format (legal form) is different with its economic substance (economic substance) in such a way with the intention solely to obtain benefits Tax Treaty/ P3B; or
3.	Recipients of income is not an owner of the truth of the economic benefits from the income (beneficial owner).

Employment of A Company for Proper Debt Management

2009-11-03T19:21:00.001+08:00

There are various resources of debt management available on the Internet. However, it might be difficult to manage your finances on your own. Fortunately, there are several debt management companies that offer specialized services on debt management plans (DMPs) to help people eliminate their debt burden. Prior to employing a debt management company, there are some important factors that you should understand and they are as follows :


	Get the contact details of the counselors working under various non profit debt management companies. You can even obtain some free suggestions on debt management by contacting any one of them. You might have to reside in a particular locality or be a member of a particular community organization for obtaining free of cost debt counseling.
	Arrange appointments with the debt management companies in your neighborhood. Stay away from any company that asks for a fee against their advices. You can even get advices on the telephone.
	Make a list of queries for the debt management company you have taken into account. You have to determine how it is going to help you become debt free. See whether it applies micromanagement of your finances or negotiations with your creditors. Don’t forget to ask whether they charge a flat fee against their services or hourly fees.
	Find out whether you can establish a payment strategy for payment of the debt management company. Some agencies are quite costly. Hence, you have to make sure you can manage the additional costs along with your usual debt payments.
	Look for recommendations. See how they worked for their previous clients and for how many years they are running their business. You must not engage a company if it cannot establish that its services would better your financial condition
	Provide the debt management company a list of your objectives. You might have particular goals such as the ambition to become debt free within five years or common goals like the expectation to reduce your interest payments and have more discretionary income every month.

Hot News : Tax Refund for Foreign Tourists In Indonesia

2009-11-02T17:22:00.005+08:00

Finally on October 15, 2009 President of Republic Indonesia passed Law No. 42 Year 2009 toward Third Amendment on Law Number 8 / 1983 toward Value Added Tax and Sales Tax on Luxury Goods. The law itself is enacted on the same date and recorded in the State Gazette of the Republic of Indonesia in 2009 with the number 150. One of the things that really new is the tax refund for the purchase of consumer goods in Indonesia by foreign tourists.

The other main points of change include :
1.	0% tariff imposed on export of taxable services (JKP) & Goods Taxable (BKP) is not tangible;
2.	Agricultural goods are taken directly from the source remains the Goods Taxable (BKP) where imposition VAT it uses mechanisms deemed input tax;
3.	Goods and Services are not subject to VAT regulated in the body of VAT Act;
4.	General mining goods taken directly from the source, including coal remains as a tax-free goods;
5.	Fresh meat, eggs that have not been processed, dairy milk, fresh vegetables, and fruit set as a necessity of tax-free;
6.	Extractive mining goods C, food and beverages served at hotel, restaurants, and the like that, hospitality services, catering is exempted from VAT;
7.	All the financial services performed by anyone, including Islamic banks are not subject to VAT;
8.	Sales tax on luxury goods (PPnBM) set a minimum tariff of 10% and a maximum of 200%;
9.	VAT restitution done without going through auditing/inspection;
10.	VAT restitution at the end of the year except for certain taxpayers who are VAT mechanism will have more pay (Lebih Bayar);
11.	Giving Rp 500.000 minimum tax refund for foreign tourists;
12.	Taxpayers no longer need to create sales invoices (invoices) are different from the tax invoice;
13.	Period of deposit of VAT and VAT reporting period relaxed became by the end of next month after the tax period ends;
14.	Re enactment joint responsibility;
15.	Entrepreneurs who do not produce still be able to credit input VAT.

When Are An Agents Considered As Permanent Establishment

2009-10-30T15:07:00.002+08:00

Definition of Permanent Establishment (BUT) in the OECD Model in Article 5 paragraph (1) :

"A fixed place of business through which the business of an enterprise is wholly or partly carried on"

Classification of Permanent Establishment:

a. Permanent Establishment Assets (Phisically)

the position of management;
branches;
offices;
factories;
workshops;
warehouses;
sales outlets;
agriculture;
plantations;
mines, etc.

b. Permanent Establishment Activity

building projects;
construction;
installation;
furnishing of services, etc.

c. Permanent Establishment Agent

d. Permanent Establishment Insurance

Concept of Agents in Civil Law, Common Law System and Tax Treaties

Civil Law :	Party acting on behalf of another party (principal) through direct and indirect presentation.
Common Law :	Does not distinguish between direct and indirect presentation.
Tax Treaties :	Should refer to Article 3 paragraph (2) OECD Model, but in Article 3 paragraph (2) (OECD Model) does not provide definitions of what is meant by an agent.

Article 5 paragraph 5 OECD MODEL:

Notwithstanding the provisions of paragraphs 1 and 2 where a person -- other than an agent of an independent status to whom paragraph 7 applies -- is acting in a Contracting State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first-mentioned Contracting State in respect of any activities which that person undertakes for the enterprise, if such a person:

a.	has and habitually exercises in that State an authority to conclude contracts in the name of the enterprise, unless the activities of such person are limited to those mentioned in paragraph 4 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph;
b.	has no such authority, but habitually maintains in the first-mentioned State a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise.

PE AGENT

Definition of Agent PE consists of several elements of the following:

person
has an authority to conclude contracts
habitually exercises an authority to conclude contracts
other than an agent of an independent status

Ad. 1. Person:

Several indicators to test whether an agent is dependent agent said:
a.	Principal, represented by his agent in the source country has the right to give instructions and make the control to the agent.
b.	Principal bear the cost of activities undertaken in the state agents, regardless of the amount of resources
c.	the business activity conducted by the agency for only one principal for a certain time period.

Ad.2. has an authority to conclude contracts:

A person who is authorized to conduct negotiations concerning the specifications of the contract which will bind the company he represented was enough to say that he runs the country's authority, even if the contract is signed by someone else in the country where the company is domiciled. (Surahmat, Rachmanto, "Avoidance of Double Taxation Agreement An Introduction", in August 2001, page 129).

Ad.3. Habitually exercises an authority to conclude contracts:

The nature of "regular" in signing this contract can be seen from the frequency of signing the contract in accordance with the company's business activities. One of the most decisive factor is whether the activity at the beginning intended for long term or just temporary. (Rahmanto Surahmat, page 130).

Ad.4. Other than an agent of an independent status:

A principal will not be deemed to have a Permanent Establishment in the source country if his business income from state sources are obtained through the person of a broker, commission or other agent-free status (independent agent) all broker, or independent agents komisoner they will be acting for their own businesses or their own principal business activities (normally/ordinary course of business).

Indonesian Workers Abroad, How the Tax Treatment? (Update)

2009-10-26T12:42:00.012+08:00

Sometime ago ever sticking case of income tax for Indonesian workers who work abroad (Singapore), while concerned has family in Indonesia and every month once home to Indonesia for 3 (three) days. He is also making money from Indonesia in the form of deposit interest, income on rent house and rent vehicles.

The debate that arises are:

1.	Are workers will be domestic taxpayers or foreign taxpayers?
2.	Is obliged to register themselves to have a NPWP in Indonesia?
3.	If not required to have NPWP in Indonesia, how the imposition of tax on income derived from Indonesia in the form of rent house, car rental and deposit interest? Is subject to Income Tax Article 23 or Article 26 or the Final Income Tax?
4.	If they have NPWP, whether the income is taxed abroad will be taxed again in Indonesia?

To answer this debate, the fact the Director General of Taxation has issued a regulation Number: PER-2/PJ./2009 date of January 12, 2009 towards Income Tax Treatment For Indonesian Workers Abroad. But it is still a lot of people, especially the Indonesian workers working abroad are not yet known. So to understand more comprehensively, so this paper needs to be made.

In this article will be described first of several ground rules / laws and Avoidance of Double Taxation Agreement (Tax Treaty) between Indonesia and Singapore that could be known how the tax aspects of income tax especially for those foreign workers.

According to Article 1 of Act No. 6 of 1983 as amended by Law No. 36 Year 2008 on General Provisions and Tax Procedures, Taxpayer is an individual or entity, including taxpayers, tax cutters, and tax collectors, who have the rights and obligations in accordance with the provisions of tax legislation on taxes.

All taxpayers who have met the requirements of subjective and objective in accordance with the provisions of legislation on taxes based on self-assessment system, must register with the office of the Directorate General of Taxes to be recorded as well as taxpayers to obtain Tax Registration Number.

Subjective requirements are requirements consistent with the provisions of the Act subject to tax in the Income Tax Act 1984 and its amendments. That is the subject of tax is:

an individual;

undivided inheritance as a single unit to replace the right;

a legal entity;

a permanent establishment.

Differentiated tax subject is the subject of domestic taxes and foreign tax subjects.

Objective requirements are the requirements for the tax subject or income received or required to perform cutting / collection in accordance with the stipulations of the Income Tax Act 1984 and its amendments.

Taxes Subjects under Article 2 of Law of Income Tax is :

5.1.

Subject to tax in the domestic country are : an individual residing in Indonesia, an individual residing in Indonesia for more than 183 (one hundred and eighty three) days within a period of 12 (twelve) months, or a private person in a fiscal year in Indonesia and have the intention to reside in Indonesia;

5.2.

The tax subject of foreign is :

individuals not residing in Indonesia, an individual residing in Indonesia are not more than 183 (one hundred and eighty three) days within a period of 12 (twelve) months, and entities that are not established and not domiciled in Indonesia, which runs business or conduct activities through a permanent establishment in Indonesia; and

individuals not residing in Indonesia, an individual residing in Indonesia are not more than 183 (one hundred and eighty three) days within a period of 12 (twelve) months, and entities that are not established and not domiciled in Indonesia, which can receive or obtain income from Indonesia not from doing business or conduct activities through a permanent establishment in Indonesia.

Article 4 Tax Treaty Indonesia-Singapore explained about fiscal domicile, namely:

For the purposes of this Agreement, the term "a resident of a Contracting State" means any person who is resident in a Contracting State for tax purposes of that Contracting State. This term shall not include a permanent establishment of a foreign enterprise which is treated as a resident for tax purposes.

Where by reason of the provisions of paragraph 1 an Individual is a resident of both Contracting States, then his status shall be determined in accordance with the following rules:

he shall be deemed to be a resident of the Contracting State in which he has a permanent home available to him. If he has a permanent home available to him in both Contracting States, he shall be deemed to be a resident of the Contracting State with which his personal and economic relations are closest (center of vital interests);

if the Contracting State in which he has his center of vital interests can not be determined, or if he has not a permanent home available to him in either Contracting State, he shall be deemed to be a resident of the Contracting State in which he has an habitual abode;

if he has an habitual abode in both Contracting States or in neither of them, the competent authorities of the Contracting States shall settle this question by mutual agreement.

Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, the competent authorities of the Contracting States shall settle the question by mutual agreement.

On the basis of several provisions above, then the following answer to the debate concluded associated income tax for foreign workers (in this case in Singapore), namely:

If you work in Singapore for more than 183 days, it is based on Singapore tax provisions, the respective eligible residents in the country. If in addition to a resident in Singapore also have a place to stay in Indonesia, there will be a double residence (dual residence).

Resolution of dual residence is set in Indonesia Singapore Tax Treaty in Article 4 paragraph (2). If a person is a resident in both countries that signed the Tax Treaty, the status shall be determined according to the provisions as follows:

He will be considered a resident of the Contracting State in which he has a permanent home available to him. If he has a permanent home available in both States, he shall be deemed a resident of the State where there are personal relationships and a tighter economy (center of vital interests);

If the Contracting State in which the center's interests can not be determined, or if he has not a permanent home available to him in one country, then he will be regarded as residents of the country where it usually dwells;

If he has not a habit of living in both Contracting States or not at all have it in one Contracting State are the officials in charge of the Contracting States will solve the problem based on mutual consent.

How does the imposition of income tax on income from house rent, car rental and deposit rates in Indonesia?
Of the provisions of Tax Treaty Indonesia Singapore on solving the dual residence (referred to as the tie breaker rule), then:

if it is assumed only has a permanent home (domicile) in Singapore (working in Singapore exceed 183 days or by the time test by Singapore tax provisions), then in this set is resident in Singapore. Status in Indonesia is a non-resident. With Indonesia's status as a non-resident, the worker must pay taxes only in Indonesia, if he has a source of income in Indonesia (Income Tax Article 26). Income from rent a house and deposit interest imposed income tax final. And income from rental of vehicles subject to Income Tax Article 26.

But if instead it is assumed that workers assigned to residents in Indonesia because it only has a permanent home in Indonesia or if having a residence in both countries but in Indonesia have personal relationships and a tighter economy (center of vital interests), then to required to enroll for a NPWP in the country. So in Indonesia Income Tax imposed on all income sourced both in Indonesia and from abroad. Income tax already deducted abroad can be a tax credit in Indonesia by observing the provisions of Article 24 of the Income Tax Act.

But in the Regulation of the Director General of Taxation Tax PER-2/PJ./2009 dated January 12, 2009 of the Income Tax Treatment For Indonesian Workers Overseas has explicitly stated as follows:

Indonesian workers abroad is an individual Indonesian citizens who work abroad for more than 183 days within a period of 12 months;

Indonesian workers abroad is subject to foreign taxes;

On income received or accrued by Indonesian workers abroad in connection with his work abroad and have been taxed abroad, will not be subject to income tax again in Indonesia;

In the case of Indonesian workers overseas receive or obtain income from Indonesia then the income is taxable income according to the applicable provisions.

From the above it was obvious how the tax treatment of income tax especially for Indonesian workers who work abroad. For the State other than Singapore of course, we look back at how his Tax Treaty. Although strict accordance PER-2/PJ./2009 been mentioned throughout the more than 183 days in the 12 months they will work is subject to tax overseas, but still not ruled out if these workers want to be a taxpayer in the country (perhaps because in some cases the tax calculation can be smaller) to obtain NPWP should meet the requirements as stated in his Tax Treaty.

Comparison Income Tax between Singapore Resident (Doesn't have NPWP) and Indonesian Resident (have NPWP):
Account		Sum	Doesn't Have NPWP	Have NPWP
Salary on Singapore		240,000,000		240,000,000
Income from House Rent		25,000,000
Income from Deposit Interest		15,000,000
Income from Vehicle Rent		35,000,000		35,000,000

Personal Income Tax:
Total Income				275,000,000
PTKP K/2				19,800,000
Taxable Income				255,200,000

Personal Income Tax				33,800,000
Tax Credit Article 24				(12,960,000)
Tax Credit Article 23 (Income Vehicle rent)				(5,250,000)
Fiscal Tax (2,5 jt @ 12)			30,000,000
Final Income Tax (house rent & deposit interes):
	Final Income Tax on house rent (10%)		2,500,000	2,500,000
	On Deposit Interest (20%)		3,000,000	3,000,000
Withholding Income Tax at Indonesia:
	Income Tax Article 26 (Vehicle Rent)		3,500,000
	Income Tax Article 23 (Vehicle Rent)			5,250,000
Withholding Income Tax at Singapore :
	Income Tax on Salary at Singapura		12,960,000	12,960,000
Total Income Tax			51,960,000	39,300,000

Source : Mr. Dwitomo, Soehendro, Ak., M.Si Exposure procced/translated and added by Mr. Peaceman

Income Tax Article 21 For Not Employees (New Terms)

2009-10-23T16:05:00.008+08:00

Recently been published Regulation Directorate General of Taxation Tax PER-57/PJ/2009 dated October 12, 2009. These regulations amend PER-31/PJ/2009 about the Technical Guidelines Cutting Procedures,Deposit and Reporting Income Tax Article 21 and / or 26 Income Tax Due With Jobs, Services and Personal Activities.

Which changed the provisions of Article 9 letter a number 4, and c, Article 10 paragraph (2) letter c and paragraph (5) and Article 16. In essence, this regulation change is to change the structure of calculation of Income Tax Article 21 for groups of income recipients rather than employees.

Based on Article 3 PER-31/PJ/2009, there are four groups of income recipients cut Tax Article 21 are:

Employees,

Recipient severance pay, retirement or pension benefits money, annuities, or old age security, including their heirs,

Not employees, and

Participant activities that receive or obtain income in connection with participation in an activity.

Income recipients are not employees consist of:

Experts who do the work free, which consists of lawyers, accountants,architects, doctors, consultants, notaries, appraisers, and actuaries; music player, the host, singers, comedians, movie stars, soap star, commercials, director, film crew, photomodel, modeling, drama, dancers, sculptors, painters and other artists;

Sports advisor, teacher, coach, speaker, counselor, and the moderator;

Author, researcher, and translator;

Service providers in all areas, including computer engineering and systems applications,telecommunications, electronics, photography, economic, and social and service providers to a committee;

advertising agencies;

supervisor or project manager;

carriers are finding order or subscription or as an intermediary;

officers merchandise vendors;

foreign service officers insurance;

distributor of multilevel marketing company or direct selling and similar activities other;

Sustainable nature vs. Not Sustainable
Compensation to not employees is the money with the name and in whatever form payable or given to not employees with respect to employment, services, or activities carried out, among other things, honorarium, commissions, fees, and similar income another.
Basically no employee reward to be divided into two types based nature of the reward that is sustainable and rewards that are not sustainable.
Reward to employees that are not sustainable is the reward for not employees with paid or payable characteristics more than one time in one year calendar.
Differences of this nature will distinguish how the calculation of Income Tax Article 21 is payable.

Income that is Not Sustainable Employee
Calculation of Tax Article 21 of this income is charged with Article 17 to Personal taxpayers against the cumulative taxable income in a calendar year. (Taxable income is 50% Gross Income minus taxable income). Thus, if described the calculation is as follows:

Income Tax Rates Article 21 = Article 17 x cumulative (50% Gross income- taxable income)

However, the reduction of taxable income above can be done if the recipient meets the income
conditions stipulated in Article 13 paragraph (1) PER-31/PJ/2009, which has a Main Number
Taxpayer (NPWP) and only get income from employment with the Income Tax Cut Article 21 and / or Income Tax Article 26 and no other income.

If you do not meet the above requirements, then the calculation becomes:

Income Tax Rates Article 21 = Article 17 x 50% x cumulative Gross income

Income Not Employees which are Not Sustainable
If the reward to not civil in nature is not sustainable, then the calculation of Income Tax
Article 21 is in charge of Article 17 for Personal taxpayers to 50% income.

Tax Manipulator Will Be Hard to Circumvent

2009-10-21T16:37:00.003+08:00

The naughty Taxpayers who likes tinkering with the financial statements to decrease the tax count, would be difficult to circumvent now. Section, Directorate General of Taxation Ministry of Finance has a benchmarking system to detect potential corporate tax.

The Technical Responsible team for Benchmarking Sub-Directorate Business Process Transformation Directorate General of Taxes Singgih said, with a system is called Total Benchmarking , it has a reference to identify any taxpayer who pays the tax compliance is relatively low. "So, companies that pay taxes outside the norm will be seen," he said during a workshop MoF last weekend .

According Singgih, as a first step, the Directorate General of Taxes has completed benchmarking for 20 Classification of Economic Activities (KLU) or industry sector. Formulation is based on the assessed sector has a large enough size so that industry output is also a big tax. "Our new data is completed this week," he said.

Business sector who have completed the industry benchmarking is crude vegetable oils and animal, vegetable oil from palm oil, clove cigarettes, white cigarettes, pulp and paper, publishing industry, newspapers and magazines, pharmaceuticals, manufacturer of motorcycles, 4-wheel vehicle manufacturer or more, construction, and real estate.

Furthermore, private hospitals, bread, large commercial car (dealer), trade in equipment and household equipment, large commercial construction materials, retail trade are the main items of food and beverages or tobacco in supermarkets, television radio industry, and industry food from chocolate and candy.

How does the work mechanism system Total Benchmarking? According Singgih, the system developed by the 14 tax ratio. Count results in the normal tax base figures for each sector. For example, the tax calculation for the industrial sector A find a number that the normal tax deposits from a company in the sector for a percentage of profit before tax. For that, the Directorate General of Taxation will comb the value of Taxpayer tax payment is less than the count benchmarking. "We will make clarifications to the relevant taxpayer to ask why the tax under the prevalence ratio. If the taxpayer can not give an explanation, it will proceed with the investigation," he explained.

Singgih admitted, a new benchmarking system touched 20 business sectors are still very minimal. Therefore, the Ministry of Industry reported that there were 1200 business sector. For that, in the near future, the Directorate General of Taxation will return to complete benchmarking system for 30 business sectors. "Later, the mining industry will be included in the 30 list," he explained.

Earlier, Director General of Taxes Tjiptardjo Mochamad said, intensification through tax optimization of large taxpayers is one of the Directorate General of Taxes stance to boost tax deposits, which until the end of September had reached Rp 377.86 trillion, or 65.44 percent of the target. "We know, there are many large taxpayers the tax is not ideal," he said. (Jawapos)

Directorate General of Taxation is Developing Pattern detection Taxpayers Compliance through Benchmarking

2009-10-19T18:09:00.006+08:00

Jakarta, 20/10/09 (Fiscal News) - Directorate General of Taxes in the last two years developing the detection pattern taxpayer compliance (WP) with benchmarking. This pattern is an indicator of tax payments for testers business sector which will begin in the near future be applied.

Bechmarking will be used to identify the level of compliance in running the business sector in the tax payment obligations. It is important to further streamline the tax performance, given the human resources is still very limited.

There are at least six benchmarks as a means of detection of material compliance examiners Taxpayer tax, namely Return on Assets (ROA), Gross Profit Margin (GPM), Earning Before Interest and Taxes (EBIT), Net Profit Margin (NPM), Corporation Tax to Turn Over Ratio (CTTOR), and Tax to Turn Over Ratio (TTOR). Each benchmark ratio can be different for each type of business and tax year. Based on the existing benchmark, if there is a difference with the Tax Return (SPT), Tax Services Office (KPP) will make an appeal to taxpayers to pay taxes.

The six benchmarks are a tool to test detection in the Taxpayers reported the Notice. In addition, the benchmark is also a means balancing (balancing) the implementation of self-assessment system, namely belief in taxpayer to compute, calculate, pay, and the reported tax liabilities through the Tax Return (SPT).

Tax Management: The Actual Period Of Tangible Assets Not Building for Purposes Depreciation

2009-10-19T14:11:00.007+08:00

Recently has published new regulations which Regulation of the Director General of Tax No. PER-55/PJ./2009 dated October 2, 2009 towards the Procedure for Application and Determination In The Actual Period of Tangible Assets not building for depreciation purposes.
As we all know that for the purposes of depreciation, the tangible assets not building in accordance with referred to in Article 11 paragraph (6) of Act Number 7/1983 towards Income Tax as amended several times and latest by Act Number 36/2008 categorized into Group 1, Group 2, Group 3 and Group 4.

Types of tangible assets not building that is not listed in Appendix I, Appendix II, Appendix III, and Appendix IV, Regulation of the Minister of Finance Number 96/PMK.03/2009, for the sake of depreciation is used in Group 3.

In this new provision mentioned if taxpayer can demonstrate the real benefits of a tangible property not building can not be inserted into 3 groups, Taxpayers must apply to the determination of the tangible assets not building in accordance with the actual benefits to the Director General of Taxes through the Head of Regional Office of Directorate General of Taxes in charge of the Tax Office which Tax Payer registered.

The application must be attached as well:

1. detailed explanation of the assets;
2. assets specifications from the manufacturer ;
3. approximate age of the assets / the economic benefits from the Public Appraiser ; and
4. supporting technical documents from manufacturers about the benefits of assets.

In terms of tax management, the taxpayer determine the amount of depreciation according to the actual useful life and then can make arrangements amount of income tax to be paid.

A New Regulation For Income Tax Article 21 (Employee) in Indonesia

2009-10-16T17:35:00.006+08:00

We let you know that have been published Ministry of Finance Regulation Number PER- 57/2009 which is a change of Regulation No. PER-31 of Income Tax Article 21.
All payments to the Non-Employee neither he nor experts are not, all using the estimated 50% of Net Income. Initially 50% of Net Income is only for experts only. This is retroactive as of January 1 2009.
There are also new rules regarding the calculation of net income norms for foreign service officers (Multi Level Marketing).

Comparison Concept of Earnings and Expense According Accounting versus Taxation

2009-10-14T17:39:00.007+08:00

1. Earnings Concept
According Judisseno income is the amount of money received for work done of individuals, agencies, and other business forms that can be used for economic activities such as consume and or accumulate and increase wealth. While Prat stated "Net income is the difference between the revenues generated by a company in a particular time period and the expenses required to generate those revenues."

According to the Basic Framework for Preparation and Presentation of Financial Statements, revenue (income) is to increase economic benefits for an accounting period in the form of income and assets increase or decrease in liabilities resulting increase in equity that do not come from investor contributions. Definition of income includes both income (revenues) and profits (gains). Income arising in the implementation of regular activities and the company known as different as sales, service income (fees), interest, dividends, royalties and rent. Benefits other heading reflects that meet the definition of income and may arise or may not arise in the implementation of the usual corporate activities. Benefits reflect the increase in economic benefits and thus are not essentially different from the income.
According to Article 4 paragraph (1) of Act No. 36 of 2008 on the Fourth Amendment of Law Number 7 Year 1983 on Income Tax, which is the additional income is any economic capability received or accrued by either the Taxpayer from Indonesia and from outside Indonesia, which can be used for consumption or to increase the wealth of the relevant taxpayer with the name and in whatever form, including:

a. reimbursement or remuneration related to employment or services received or accrued, including salaries, wages, allowances, honorarium, commissions, bonuses, gratuities, pensions, or other forms of remuneration, unless otherwise stipulated in this Law;
b. a gift from the lottery or work or activities, and awards;
c. profit;
d. profits from the sale or transfer of property including:

1) benefits due to the transfer of property to the corporation, association, and other agencies in lieu of shares or capital;
2) corporate profits, community and other agencies for the transfer of property to shareholders, partners, or members;
3) profit for liquidation, merger, consolidation, expansion, solution, or a takeover attempt;
4) transfer of property gains in the form of grants, aid or donation, except that given to blood relatives in a straight line one degree, and religious bodies or agencies or educational charities or small businesses, including cooperatives established by the Minister of Finance, as long as there is no relationship with business, employment, ownership or control between the parties concerned;

e. reinstatement of tax payments that have been charged as an expense;
f. interest including premiums, discounts, and compensation for debt repayment guarantee;
g. dividends, with the name and in whatever form, including dividends from insurance companies to policyholders, and the distribution of the remaining business of the cooperative;
h. royalties;
i. rental and other income related to the use of property;
j. receiving or obtaining periodic payments;
k. profit due to debt relief, except to a certain amount stipulated by Government Regulation;
l. foreign exchange gains due to foreign currency;
m. the difference is more due to revaluation of assets;
n. insurance premiums;
o. contribution received or accrued from the association consisting of members Taxpayers who run businesses or professional services;
p. additional net wealth that comes from income not subject to tax.
Whereas in Article 4 paragraph (2) Income Tax Act there are certain income income-specifically regulated as deposit interest and other savings, income from securities transactions and other shares in the stock market, income from transfer of property or the form of land and buildings , and certain other income, the imposition of taxes shall be regulated by Government Regulation. Besides, there are also income tax-exempt as an object that is regulated in Article 4 paragraph (3) Income Tax Act are:

a. 1) aid donations, including alms received by the agency or institution Amil Zakat charity established or approved by the Government and the recipient is entitled to zakat;
2) granted property received by the blood relatives in a straight line one degree, and by religious bodies or agencies or educational charities or small businesses, including cooperatives established by the Minister of Finance as long as there is no connection with business, employment, ownership, or control of the parties concerned;
b. heritage;
c. assets including cash deposits received by the agency referred to in Article 2 paragraph (1) letter b in place of stock or as a substitute for capital;
d. reimbursement or compensation in connection with employment or services received or acquired in kind and or enjoyment of the taxpayer or the Government;
e. payment from the insurance company to an individual in connection with health insurance, accident insurance, life insurance, insurance dual-purpose, and scholarship insurance;
f. dividends or the profits received or accrued as a limited liability domestic taxpayers, cooperatives, state-owned enterprises, or Regional-Owned Enterprises, the capital of the company that was established and domiciled in Indonesia, provided:

1) dividends derived from income reserves held; and
2) for limited liability companies, State Owned Enterprises and Regional Owned Enterprises who receive dividends, stock ownership in the entity that provides the lowest dividend 25% (twenty five percent) of the total paid-up capital and must have an active business outside ownership it;

g. contribution received or accrued pension fund whose establishment was approved by the Minister of Finance, whether paid by the employer or employee;
h. income from capital invested by pension funds as referred to in the letter g, in certain areas as stipulated by the Decree of the Minister of Finance;
i. the profits received or accrued by a member of the limited partnership whose capital is not divided into shares, partnerships, associations, firms, and partnerships;
j. bond interest received or accrued by mutual fund companies for 5 (five) years since the founding of the company's first or business licensing;
k. income received or accrued by a venture capital firm profits from the body parts business partner, founded and run the business or activities in Indonesia, provided such business partner agencies:

1) is a small company, medium, or who carry out activities in the business sectors as stipulated by the Decree of the Minister of Finance; and
2) shares are not traded on stock exchanges in Indonesia.

2. Expense Concept
According to the Basic Framework for Preparation and Presentation of Financial Statements, Expenses (expenses) is to decrease the economic benefits during an accounting period in the form of outflow or decrease in assets or liabilities that result in the decline in equity that are not related to the distribution to investors. The definition encompasses both the burden and the burden of losses incurred in the implementation of the usual corporate activities. Expenses incurred in conducting normal business activities include, for example, cost of sales, salaries and depreciation. Expenses are usually shaped outflow or reduction of assets such as cash (and equivalents), inventory and fixed assets. Loss reflects other posts that meet the definition of the burden that may arise or may arise not from the usual corporate activities, such losses can arise from natural disasters, floods, as well as arising from the release of non-current assets.
Provisions regarding the tax costs provided for in Article 6 and Article 9 of the Income Tax Act governing the costs be deducted from the gross income and not deductible. The costs may be deducted is as follows:

a. fees for obtaining, collecting and maintaining income, including material purchase costs, costs related to employment or services, including wages, salaries, honorarium, bonuses, gratuities, and allowances given in the form of money, interest, rents, royalties, travel expenses, costs waste processing, insurance premiums, administrative costs, and taxes except income tax;

b. depreciation of expenditures to acquire tangible assets and amortization of expenses to obtain the right and the other costs that have a useful life of more than 1 (one) year as referred to in Article 11 and Article 11A;

c. contributions to a pension fund whose establishment was approved by the Minister of Finance;
d. losses due to the sale or transfer of property owned and used in a company or owned for obtaining, collecting, and maintaining revenue;

e. foreign exchange losses from foreign currency;
f. research and development costs that the company conducted in Indonesia;
g. cost of scholarships, internships, and training;
h. receivables that obviously can not be charged, provided that:

1) has been charged as an expense in the income statement of commercial;
2) has submitted the case to the District Court billing or the Bureau of State Debts and Auction (BUPLN) or a written agreement concerning the abolition receivable / debt relief between creditors and debtors in question;
3) have been published in a general or specific; and
4) Taxpayer must submit a list of debts that can not be billed to the Directorate General of Taxes, which shall be further implementation of the Decision of the Director General of Taxes.

There are also expenses not deductible in calculating taxable income as listed in Article 9 paragraph (1) Income Tax Act, namely:
a. profit sharing with the name and in whatever form such as dividends, including dividends paid by insurance companies to policyholders, and the distribution of the remaining business of the cooperative;

b. expenses charged or incurred for the personal benefit of shareholders, partners, or members;
c. formation or accumulation of a reserve fund but not collectible accounts receivable reserves for the bank business and lease with option rights, reserves for insurance businesses, and reserve costs for mining reclamation, the terms and conditions stipulated by the Decree of the Minister of Finance;

d. health insurance premiums, accident insurance, life insurance, insurance dual-purpose, and scholarship insurance, paid by individual taxpayers, unless paid by the employer and the premium is calculated as income for Tax Payer;

e. reimbursement or compensation in connection with work or services provided in kind and enjoyment, except the provision of food and beverages for all employees as well as reimbursement or compensation in kind and the pleasure in certain areas and relating to the implementation of the work as stipulated by Decree of the Minister of Finance;

f. which exceeds the reasonable amount paid to shareholders or to the parties having a special relationship as compensation in connection with work performed;

g. the donated property, assistance or donations, and inheritance as mentioned in Article 4 paragraph (3) letters a and b, except zakat on income actually paid by individual taxpayers Islamic religion and or Taxpayer domestic entity that owned by the Islamic religion to the agency or institution Amil Zakat charity established or approved by the Government;

h. Income Tax;
i. expenses charged or incurred for personal interests or taxpayers their dependents;
j. salaries paid to members of the partnership, firm, or limited partnership whose capital is not divided into shares;
k. administrative sanctions in the form of interest, fines, and increase criminal penalties and fines instead related to the implementation of legislation in the field of taxation.

Transfer Pricing

2009-10-14T14:24:00.006+08:00

Transfer Pricing is a very relevant issue with the Tax Management, many practitioners who live identify Transfer Pricing with Tax Planning or Tax Management

. Transfer Pricing is derived from Transfer Price is often interpreted as the value attached to the transfer of goods and services in a transaction between parties who have a special relationship.

Transfer Pricing may occur either in a condition which is very simple to the very complex conditions, this depends on the objectives of the management. But there is an ideal condition to be met in order to run optimally, according Govindrajan ideal conditions to be met are: • Competent People; any manager interested in addressing this issue which has long-term vision, there is also a strong staff and competent in conducting negotiations; • Good Atmosphere; manager must take profitability into consideration factors and as an important goal; • A Market Price; The ideal Transfer Pricing is established market price and the same normal (quantity, delivery time, variety) with goods that are transferred; • Freedom of Source; the alternatives that can be chosen by decision makers; • Full Flow of Information; the flow of good information so that all possible alternatives that can be known. • Negotiation; must have a good mechanism in negotiating between business units. B. According to the OECD Transfer Pricing. Considering the application of transfer pricing is a matter largely of multinational companies and with the interests of some countries, the OECD more attention to this problem by conducting a comprehensive study. The results of the study was stated in a report known as the OECD Transfer Pricing Guidelines which contains the instructions handling of transfer pricing for member countries of OECD. Based on the OECD's guidelines can be known about the main principles of the Transfer Pricing, which is that there are two things that is affiliated or related parties and the fairness of prices or arm's length principle. Both principles must be accumulatively fulfilled in order to enter the category of transfer pricing that is acceptable under these guidelines. • Affiliate, in a transfer pricing must be at least two parties are parties to a transfer or the transferor and the party receiving the transfer or the transferee. The two parties must be from an affiliate or have a special relationship. • Arm's Length Principle; is a reason. An inter-affiliate transactions in connection with transfer pricing, should be within a reasonable limit or arm's length. Impropriety of a transaction which multinational companies can give bad impact to the global economy. These distortions would lead to macroeconomic instability of an equilibrium for a particular commodity is transferred. In article 9 of the model tax treaty drawn up by the OECD noted that: "When conditions are made or imposed between two associated enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have Accrued to one of the enterprises, but, by reason of those conditions, have no Accrued, may be included in the profits of that enterprises and taxed accordingly ". Explicitly explained that when the transactions occur between companies that have a special relationship is the condition of the transaction must be equal to the transactions between independent parties, and if no match can be corrected or adjusted. C. Transfer Pricing According to Indonesia Taxation Law. Transfer Pricing fiscal terms can be interpreted as an attempt to divert income, tax base and / or fees from a company to one or more other firms through inter-company transactions that have a special relationship, with a view to pressing global tax payable by companies it. Tax requires that transactions conducted by the taxpayer is a transaction conducted by the parties freely, resulting in price or fair value. Therefore, under Article 18 (3) Income Tax Law authorizes the Directorate General of Taxes for re-calculating the amount of income tax payers and / or cost, if there is a special relationship between the parties that deal. Based on Article 18 (4) Income Tax Act, considered to have a special relationship if: a. Taxpayers have a direct investment or indirectly lowest 25% on other payers, or the relationship between payers with the inclusion of the lowest 25% in two or more payers, as well as the relationship between the two payers or more of the latter; or b. Taxpayers over other payers or two or more payers are under the same control either directly or indirectly; or c. There is a good family relationship in blood or by marriage and a straight line or laterally one degree. D. Purpose or motivation Transfer Pricing in Indonesia Based on the research team from the UN UNTC year 1985, the motivation to do transfer pricing in Indonesia is as follows: a. Reduction of the tax object (mainly income tax), b. Easing the effects of foreign ownership restrictions, c. Decrease the influence of depreciation of the rupiah, d. Strengthening the demand or the price increase protection against competing imports, e. Securing the company of a claim for compensation or welfare of employees and environmental concerns f. Minimize the risk of uncertainty over the business activities of foreign companies. Meanwhile, according to John Dunning in the book "Multinational Enterprises and the Global Economy", motivated transfer pricing is divided into two internal and external motivation. Internal motivation: a. Reducing global tax liability. b. The need to improve the performance of control, coordination and flow of cash income from overseas companies. c. Advancing the company's strategic goals. External motivation a. Avoid or reduce tax rates b. Reduce the risk of economic, political and foreign exchange and c. Prevent or reduce restrictions on capital repatriation or dividends for the host country. E. The forms and Instrument Transfer Pricing The forms and the possible presence of transfer pricing practices may include: a. Buying and selling price of goods that are not reasonable that reported by the taxpayer, b. Unfair imposition of administrative costs and general expenses are allocated to the Central Office, c. Charging excessive interest on loans granted by shareholders' capital structure is skewed to the financing of the loan rather than with their own capital (thin capitalization), d. Charging fees for the payment of commissions, royalties, licenses, service manager, technical services or other services firms in the state despite continuing losses from year to year, e. Large dividend payments when the company reported a profit, f. Property sales prices that companies are not fair to the shareholders. g. Transaction prices of goods with foreign parties through a third party who has no business substance by using tax heaven countries and treaty shopping. h. Reinvoicing center i. Inter-company loans j. Allocation of shared costs F. Testing Method fairness Transfer Pricing a. Comparable Market Price Method / Comparable Uncontrolled Price Method (CUP) These methods take into account the fair market price by comparing the price of transactions between the parties having a special relationship with price taken into account transactions with other parties who have no special relationship to the same item, same or similar. b. Minus Sales / Resale Price Method / Selling Price Minus (RPM) Equity transfer price is approached by the sales price reductions to people who did not have a special relationship with a mark-up is reasonable. This type of transfer pricing is widely used in companies engaged in the trading business as a distributor, retailer, etc.. c. Plus Sales Price Method (Cost Plus Pricing Method / C + M) This method of approaching equity transfer price by adding mark-ups at reasonable cost of the transfer. This approach is commonly used in the delivery of intermediate goods (semi-finished product) or one group member as a subcontractor of the other. d. Comparable Profit Method (Comparable Profit Method / CPM) This method by comparing the financial statements are transactions with parties having a special relationship with another party transactions with independent parties. G. Transfer Pricing-Fighting Instruments a. Examination b. Tax Treaty - Harmonization of International Taxation c. Exchange of Information d. APA (Advance Pricing Arrangement)

Personal Income on Tax Treaty

2009-10-13T18:08:00.005+08:00

Individual income involves the individual tax income residents of a country that runs business activities in other countries. Activities include in his capacity as a professional stand-alone and within the framework of the bond work. Activities or work within the bounds of this work can be categorized as a working relationship with private companies including the current workforce as an apprentice and his position as director of a company, government employees, pension treatment, and the artists and sportsmen.

A. Independent Personal Services

Independent personal services (IPS) here is an individual who stands alone who works professionally as accounting expert, doctors, legal consultants and others. Included in the definition IPS is a scientist, writer, lecturer, tax consultant who stands alone. IPS understanding is not including the activities in the industrial and commercial.

Basically the imposition of tax on professional income is the country where the person is domiciled. But if the professional activities are conducted in source countries, source country right to tax such income if it fulfills certain conditions according to a tax treaty between the two countries concerned, usually there are three conditions, namely:
1. Does the person have a fixed place (fixed base) in the source country.
2. Are these people live in countries sources exceeds a specified time limit stipulated in a tax treaty between the two countries concerned.
3. Does the person receive income in the source country exceeds a certain amount stipulated in a tax treaty between the two countries concerned.

If the conditions as stipulated in the tax treaty are met then the source country has the right to impose a tax on income that person. But unlike Permanent Establishment, the IPS is the state income source is only entitled to tax on income from activities such fixed base, so the force of attraction principle of the rule as in BUT not apply. Was common with the BUT is that the IPS also has the right to a deduction from income for costs incurred for the purposes of these activities.

B. Dependent personal services

Definition of dependent personal services (DPS) here is if a work at a company domiciled in a country located or placed in other countries to conduct a business / employment in connection with the company where he worked.

Income derived by a resident of a state of labor relations be taxable only in that country unless the employment is exercised in the source country is a source country has the right to tax the income derived from the work in question.

However, the remuneration derived by a resident of the state of domicile for the work performed in the source countries, only taxable in the country of domicile, if fulfilled three conditions:

1. Salary recipients are in the source country in a period not exceeding the period stipulated in the tax treaty in a tax year and
2. His salary is paid by an employer who is not a source country's population and
3. His salary is not charged to the BUT or a fixed base which the employer has in the source country.

Special treatments:

1. These provisions do not apply to remuneration received for work performed on a ship or aircraft operated in the path of international traffic. Because of such remuneration shall be taxable in the country where the enterprise operating ships or aircraft is located (effective management).

2. Top remuneration received by a resident of a state in his capacity as a member of the board of directors of a company there tax rights in countries where the company where he served as a member of the board is domiciled.

3. Top remuneration received by the artist or sportsman who are living in a country of individual activities performed in their state taxable resources in the country where the activities are implemented. Artists and sports athletes in this sense includes artist film, theater, radio or television or music player or as an athlete.

4. Top remuneration received by a student or employee of a company that has been running training (job training), who performed in other countries for education, life long learning needs taxed in the country where the student or the employee's domicile prior to the activity carried out provided that the remuneration is derived from sources outside the country where they do activities.

Interests, Dividends And Royalty on Tax Treaty

2009-10-13T17:39:00.005+08:00

The right of taxation on dividends, interest and royalties is basically the state of domicile, the country where the income recipient is domiciled. State sources are also given the right of taxation but must not exceed the rate of taxation set out in the Tax Treaty. In the case of interest, dividends and royalties are paid is effectively connected with receiver PE/BUT income in Indonesia, the taxation on income, such income is subject to the regulation of business profits earned by the PE/BUT.

Since the Contract of Work and Production Sharing Contract in the mining and oil and gas regulated separately (specially), the taxation of dividends provided for in Tax Treaty Indonesia are usually not enforced, but subject to the existing arrangements in the Contract of Work or Production Sharing Contract. A. Dividend Payment of dividends will not only include profit sharing is decided in the annual meeting of shareholders, but also in the form of bonus shares, profits from the liquidation and dividend payments are also covered. Profit sharing by the community for its members rather than a dividend, unless the tax provisions in the country where the fellowship is based, are treated the same alliance as a limited liability company, thus depending on the agreement in the Tax Treaty with the country if treated as a limited liability company or not. The imposition of the tax did not see whether the dividend is paid from the profits of previous years or from the profits of the current year. On dividends may be taxed both in the country of domicile or in the source country. Imposition of tax on dividends paid in the source country, namely in countries where the company is domiciled dividend, should not exceed the tax rates specified in the Tax Treaty. Definition paid here is the fulfillment of the obligation to provide funds according to the procedures stipulated in the contract or business custom. Imposition of tax on dividends based on population size of inclusion in the corporate domicile state in the source country. Tax treaty in Indonesia with the treaty partner is usually in two types of tariffs applied to a portfolio of investment (ownership 25%>) is usually a higher rate than the ownership of shares in the framework of direct investment (ownership 25% <). About the determination of the direct investment criteria also depends on the deal, because there is also a decisive treaty with the inclusion of only 10%

Provisions about the size of the existing tariff in an agreement only applies if the dividend recipient is a person who really have it (the beneficial owner) who is a resident of the two countries concerned. Provisions of the size of the existing tariff in such agreements do not apply if the recipient has a PE/BUT dividend or a fixed base in the country where the company is domiciled divisor and dividend PE/ fixed base that is effectively connected with the company which the dividend. In such case the dividends are treated as business profits earned PE/fixed base.

Please note that the article that regulates the dividends (Article 10) is usually also covers the taxation of branch profits tax surtax on the profit after tax domicile state PE/BUT in the source country, unless the profit is invested back in Indonesia in the field - certain business areas determined by the Minister of Finance. Additional tax may not exceed the branch profits tax rate has been agreed in each treaty.
In practical terms this section should be associated with things as follows:
1. beneficial owner
2. direct / indirect investment
3. effectively connected income
4. branch profits tax

B. Interests
In this regard is the interest is income from all kinds of good bills receivable are secured by mortgage or not and whether they have a right to profit sharing of the benefits the lender or not, especially income from securities issued by government, bonds or debt papers including the premium difference is bound to present letters of securities, bonds or debt papers. The fine for late payment is not an interest according to article.

In contrast to dividends, the tax rate does not lead to economic double taxation, since interest is a cost that can be deducted from gross income to determine the amount of taxable income, unless the loan agreement to borrow, agreed that the payment of taxes on the interest charged to the lender. If this happens then the tax calculation by using the gross-up.

Equation in terms of interest here with dividends is that the interest on bonds, notes or loans, made with the imposition of withholding tax (withholding) at the time such interest payments. This tax deduction for interest is a recipient of advance tax payment (tax credit) on all income earned from various sources and activities.

Just as income from dividends, if lenders are enjoying the flowers of the country has a domicile in the country PE/BUT the source of the country domicile bill payer and debt that generates interest is effectively connected with the PE/BUT, the application of withholding tax rates on interest as a in Tax Treaty does not apply and the interest income is treated as income from existing PE/BUT in the source country.

In practical terms this chapter can be associated with things as follows:
1. beneficial owner
2. special treatment on interest
3. effectively connected income

C. Royalty
The definition here is royalty income associated with the use or the rights of use of any copyright of literary, artistic, or scientific work including cinematographic films, patents, trademarks. Pattern or model, plan, formula or secret way process, or for information about experiences in industry, commerce or science.

Regarding Intellectual Property does not have to get registered as a patent with the patent rights, as long as it has not been publicly all remuneration for its use can be categorized as royalties. The use or the right to use equipment industry, commerce or science as well as in terms of royalty here except among others in the Tax Treaty with the United States are not included in this category are rent boats, aircraft and containers. The use or right to use ships, aircraft and containers will be treated in accordance with the provisions of the shipping and air transport.

Of other special arrangements, the applicable royalty as income on dividends and interest, namely the imposition of a withholding tax in accordance with the rates set forth in each treaty and each type of income.
In practical terms this section should be associated with things as follows:
1. beneficial owner
2. income from tangible / intangible assets
3. effectively connected income
4. special treatment

Material Aspects of Tax Planning Part 2 (Case study in Indonesia)

2009-10-12T11:15:00.003+08:00

8. Revaluation
Revaluation according to the provisions of Statement of Financial Accounting Standards (PSAK 16 paragraph 29) is an accounting treatment that is not allowed because the substance of violating basic principles of accounting concepts. However, PSAK 16 allow for any provision of the government.

In terms of taxation, subject to revaluation in Circular Letter No. SE-29/PJ.42/1998 can be used as a means of tax savings because of differences in tax rates, where the revaluation is subject to the provisions of Income Tax shall be final for 10% of the profits after deducting revaluation with compensation losses last 5 years.
Revaluation can be done to take advantage of compensating the losses because the company is owned by a period of loss compensation expired after 5 years. Also a lot of potential that can be extracted profit from the revaluation. Although this revaluation adopted a final income tax at a rate of 10%, but the inaccuracies in determining the revalued assets that would be the company's financial disadvantage. Therefore, the revaluation should be done only on assets that can be depreciated and the group of assets that have a specific benefit period. The longer depreciating asset is also the smaller the financial benefits we can get through this instrument.
Given the amount of potential tax savings from the treatment of this revaluation, very unfortunate if the revaluation is only done to compensate for losses in the period before or with the purpose of the retained earnings balance to be positive.

9. Soon spring Expenditures
The suspension system of accounting adopted expenses and charge them in proportion to the contribution of these expenditures over time or to a specific size. Let's say the company pays the cost of fire insurance in July for the duration of 1 year. So according to the concept of accounting, the cost of some (half) to suspend it in the next period. So that the cost is half of the period (July to December).
Pending charges caused the company recorded a higher profit than the charge the company. Higher profits led firms to pay higher taxes too. Therefore the costs should be charged at once in the period incurred.
This is made possible because of Article 9 paragraph (2) of Act No. 17 of 2000 states that: Expenditure to get; collect and maintain the income that has a useful life of more than 1 (one) year is not allowed to be charged at once. And so on.
There was no explanation of the notion "1 (one) year" is, so even through different 2-year, 1-year provisions are met, so it can be charged at the same time under the law

10. Suspend Income
Accounting in addition to adopting the suspension load, is also the principle of Accrual, ie income is recognized proportionately with the work time or a certain performance measures, without waiting for the payment of such achievements. For example, the company has completed the laundry orders made by customers, but the order has not been paid by the related, are accounting for the work has been recognized and acknowledged the existence of income claims to customers of such receivables.
Recognition of income that does not coincide with the entry of cash into the company, causing the company will report a profit from operations, while the benefits are not supported by the entry of cash into the company. This can lead to liquidity problems the company in fulfilling tax obligations, because the unequal income recognition and the company's ability to pay the tax obligation.
If the firm earns a loss on this transaction, then immediately did the recognition of the losses suffered in the current period, but if the company would book a profit on this transaction which will delay the benefits of this happening, at least until the next period by using an alternative method of revenue recognition or can be made possible by the positive law with the treaty with tough conditions.
The delay recognition of this advantage, even if only one period of material impact on company finances. Illustration of this calculation are presented in the box below. Therefore, companies should choose a particular accounting method that can postpone income, as long as it is recognized and accepted by the applicable tax provisions.

11. Putting Profits, Losses Accelerate
At certain periods, sometimes companies do deals that is very material that it can lead to profit (gain) or loss (loss) is large. This transaction example, the company did release the assets or sell one of its business segments to other parties. Usually a company will register gains or losses over this transaction.
If the firm earns a loss on this transaction, then immediately did the recognition of the losses suffered in the current period, but if the company would book a profit on this transaction which will delay the benefits of this happening, at least until the next period by using an alternative method of revenue recognition or can be made possible by the positive law with the treaty with tough conditions.
The delay recognition of this advantage, even if only one period of material impact on company finances. Illustration of this calculation are presented in the box below.
Dated October 1, 2003 the Company made a corporate vehicle rejuvenating outdated models (out of fashion) and plans to replace it with a new vehicle a more stylish. Book value of all vehicles amounted to Rp 1 billion and sales to third parties acquired cash of Rp 2 billion. Above transaction the Company reported a profit for the release of these assets amounting to Rp 1 billion.
But because the company did release on condition that this asset is tough, which is legally a new proof of ownership transfer occurred in January 2004, then the new transaction gains recorded in January 2004. Thus the company can delay payment of the tax obligation for 1 year.
If the effective tax rate of 30% and cost of capital by 10% then the company has made savings of this tax obligation of Rp.28 million (300 million - (300 million: 1.1)).

12. Compensation in Money Vs. Natura
The provisions in Article 4 paragraph (3) letter d, of Law No. 17 of 2000 on Income Tax that is not included as tax object is: "replacement or compensation in connection with the employment or services received or acquired in kind and or pleasure of the taxpayer or the Government "
Since the return in kind is not included in the tax object, so therefore this expenditure; spring companies can not and those receiving compensation are not included in the additional terms of income. Theoretically, this exemption facility can affect the total tax liability is paid the company, because generally there are differences in effective corporate tax rate to effective tax rate the company's employees.
If the effective tax rate is 30% then the company has a "loss" of 30% of the total remuneration of loans granted to employees, whereas if the effective tax rate for employees is 10% then the firm earns a "profit" for this tax savings of 20% of compensation provided in kind.
Thus, the use of instruments in exchange for this kind will only be effective if the effective corporate tax rate is lower than the effective tax rate of employees. So that the ideal conditions for the application of this facility is when a company in the current year is estimated to have losses.
Example: The company is expected to come will experience profits or losses before a salary of Rp 1 billion, 'the Company has a salary cost of Rp 200 million, and plans to give its employees a salary increase of Rp 50 million. The increase in compensation can be given in cash or in kind. When in the form of cash then the company must provide tax benefits for an additional 10% of these rewards (eg. effective tax rate for employees is 10%). Which scenario is the most profitable company?
That for the record company profits and effective corporate tax rate higher than the effective rate of tax benefits the company; gift in the form of cash rewards will be more profitable and vice versa.

13. Money allowance Eat or Eat Free?
To provide relief to employees for consumption in the workplace, companies can provide meal allowances for each month is calculated at a rate per day food allowance for each employee level.
In relation to taxation, the provision of such meal allowance, will be payable Tax Article 21 employees who will be merged with the salary component and other allowances. Whereas in relation to the Income Tax Agency, Benefit Dinner Money Expense is deductible.
Article 9 paragraph (1) letter e, of Law No. 17 of 2000 on Income Tax states that to determine the amount of taxable income for taxpayers in the country and the permanent establishment shall not be deducted:
"E. Replacement or compensation in connection with the work or services provided in kind and enjoyment, except the provision of food and beverages for all employees ... etc. "
These provisions provide an alternative for you to evaluate whether employees will be given allowances for free meals or eating alone workplace. Illustration two alternative calculations are as follows:
The Company has been providing salary and allowances Rp.1.5 billion, including meal allowances of Rp 200 million. Which scenario is the most profitable company if the mechanism is converted into free meals at work in conditions of profit before tax Rp.1 billion and Rp 1 milyar loss, the company effective tariff rates 30% and 10% of employees income tax.
This happens because the free food at work Expense is deductible but not the object of income tax employees.
In this example, income tax deducted from employee's payroll so the total benefit of employees will increase with the free meals for employee income tax withholding down. If the income tax paid by a company employee, the tax savings can be obtained by applying the company's reimbursement allowances for food with free meals.

14. Capital Lease vs Cash
Capital Lease provisions regarding regulated Decree of the Minister of Finance No. 1169/KMK.01 / 1991, in which the capital lease criteria are:
a. Agreement includes an option for the lessee
b. Leasing period:
- goals I> 2 years
- goal II & III> 3 years
- building> 7 years
Purchases of assets in cash only the depreciation costs for the company for a certain period in accordance with the provisions of depreciation of fixed assets. While the purchase of assets by way of lease (capital lease) under the Minister of Finance Decree No. 1169/KMK.01 / 1991, the company can recognize all the payments made for the repayment of capital leases as expenses, except the last payment that was agreed by the lessee and lessor as a value remainder of the assets that became the object of leasing.
Planning on how many years the cost will be allocated depending on the number of installments will be made. So the company can arrange more flexible loading time compared to cash purchases, in which its provisions are standard, the imposition of leasing depends on you and the lessor, may shorten or take longer.
Example: Company made a 4-year lease to purchase equipment as follows:
Cash Price Rp 1,000,000,000
Interest 12.5%
Annual installments of Rp.329,234,500
Then the imposition of the first year could be the third respectively Rp 329,234,500. As for the fourth year-end payments to the acquisition price of fixed assets which are depreciated starting in the fourth.
Recognition of differences in how these costs of different financing models provide the potential for corporate tax savings. Of course, the calculations are accurate technically required in estimating the benefits of this financing option way, that is about the size of opportunity cost of idle cash because they do not pay cash. Is embedded as an investment or deposit with the Final Income Tax 20%, each company can have the optimal point different.
Other tax benefits that should be considered is the provision of article 23 paragraph (4) is not done cutting Income Tax Article 23 of the rent paid or payable in connection with the lease with option rights.

15. Reduce Installment Tax
Indonesian tax laws require taxpayers to make tax payments on a monthly basis. This provision is an existing obligation on the taxpayer in accordance with the provisions of the Law of Income Tax Article 25, or what we usually know the installment Income Tax article 25. The amount of payments we have to pay this is the division of income tax payable is reduced Income Tax article 22, 23, 24 years ago, the numerator divided by as many as 12 months.
Things we can do to ease our financial burden in order to normalize the mortgage tax is a regular income that we reported in the annual SPT.
In addition to the normalization of income, we also make our payments reduced by reducing payments apply as stipulated in terms taxation. The procedure to perform general reduction obligations are as follows:
1. Who can propose a reduction of Income Tax Article 25 is a company that has financial statements in the period which shows estimated losses that occur more pay.
2. Reduction mechanism, with a written request to the Directorate General of Taxes through the Tax Office listed.
3. Application attached with the financial report presents the petition to the moon and the projected reduction in the financial statements rest period.
4. For a state-owned companies, the reduction can be as long as there is a change proposed Work Plan and Budget Company (RKAP).
Example: The Company has tax payments in 2003 amounting to Rp 150 million per month, in April 2003 the company made a request to lower the mortgage company to Rp 100 million. At the end of the year the company recorded a profit of USD 1.8 billion rupiah.
What are the benefits of reduced mortgage company if the cost of capital of 12%?

16. Zakat as an Instrument Utilizing Tax Exempt
In general, the principle of taxation able tax tax deductible, non-deductible non-Taxable". But in accordance with the provisions of law there are some financing vehicles that can be a tax deduction even for those who received no object falls into the category of tax. An example is the "Zakat" (Article 9 of Law No. 17 of 2000).
Companies as profit-producing organization, did not escape the demands of society for its social contribution, although this is not the duty of the company.
Some specific industries, issued a considerable cost in the form of donations to meet the demands and expectations of society. Social expenditure cost the company as this, aims to maintain environmental harmony, only the contribution does not include elements that can be a tax deduction.
Therefore, to overcome this company can take advantage of charity organizations that have been approved by the government to channel funds to those entitled pursuant to the public.
Thus the company's costs would be to remove the deduction from corporate income. Thus, each Rp 10 rupiah company expense, then the company can make a tax savings of Rp 3 compared with a donation.

17. Handling of Final Earnings
To strengthen the going concern, companies need to diversify the business. And often these types of business are far different characteristics, there is a final and there is not final.
As already illustrated in the previous chart that the final revenue and the accompanying costs must be excluded from the calculation of income tax payable for that year. Sometimes direct identification can not be done on the costs associated with the Final Income Tax, so you have to do the comparison is proportional to the revenue earned.
This is not a problem if the income is not final and Final Revenue has the characteristics of different operating costs due to the different degrees of complexity. Distortion can occur allocation of operating costs with the actual characteristics for allocation pursuant to Article 6 Law Act No. 17 of 2000, conducted by base revenue.

In the handling of taxes, in reality it is difficult to directly identify the operating expense. Therefore, according to the calculation of tax provisions are as follows:

So the operating costs of consultant services = 500/1300 * 200 = 77, so that the total taxable income = 200 to 77 = 123.
In this example there is distortion of the characteristics of revenue with taxable income because the company could not immediately identify the operating costs.
If this happens on a large scale, should have evaluated these distortions, and then determine whether or not there is separation of departments that have a separate report or not.

18. Using the instruments of international tax
Another important instrument is the element of international taxation. This related to the existence of the lex specialist in international taxation, especially related to the tax treaty. The use of these instruments are of course different considering different tax rates in the tax treaty.
a. Establish a subsidiary in Foreign Affairs or the permanent establishment
Business development abroad requires supporting the management of Foreign Affairs. Supporting what we need to be forming a subsidiary in Foreign Affairs as a separate business entity. The consequence of this alternative choice, that the tax on subsidiary management refers to the tax laws in the country. Income received by companies is the dividend payable.
The second alternative is to form a permanent establishment (in the tax law Indonesia: Permanent Establishment) where all the income in foreign income will be foreign companies.
This need to know to perform calculations done on the value of an ideal contract for you.

Because the treatment of companies and permanent establishment in a different tax, the company needs to do an analysis of the two alternatives, which is more profitable to look at the provisions of state tax treaty with Indonesia. Similarly, if foreign companies want to open a business in Indonesia.
b. Contract services
Service contract with parties in other countries are usually unique. Common characteristic is that the entire tax deduction / collection services are paid by the recipient (contract net).
If you experience this, so before you make a contract you should look back a tax treaty provisions on services between Indonesia and the country where the service provider is located. How long will test his time, how much is the charge, and others.
This need to know to perform calculations done on the value of an ideal contract for you.

Material Aspects of Tax Planning Part 1 (Case study in Indonesia)

2009-10-10T11:14:00.000+08:00

Tax planning purposes in the material sense is to achieve tax savings indicated by lower effective tax rate for taxpayers if the taxpayer than the tax obligations in the normal way.
Points in the tax planning aspects of the material are as follows:

1. Legal form
2. Company founded in One Line of Business
3. Portrait Future Prospects
4. Revenue and Expense Define Your Company
5. Inventory Management
6. Purchasing Assets
7. Depreciation of Fixed Assets
8. Revaluation
9. Soon spring Expenditures
10. defer income
11. Putting Profits, Losses Accelerate
12. Compensation in the form of cash donations vs.
13. allowances for meals or free meals
14. capital lease versus cash
15. reduce the tax installment
16. handling of the final income
17. using the instruments of international tax
For further understanding will be discussed these points.

1. Legal form
Taking advantage of the various choices of legal entities (legal entity) appropriate to their needs and the type of business. When viewed from the perspective of taxation, sometimes the election of legal entities (legal entities) of individuals, firms and joint venture (partnership) is a form that is more favorable than a Limited Company.
In a limited liability company shareholders but the individual or entity is less than 25%, will result in tax on corporate income that is subject to two times during the income derived by the company and at the time of earnings distributed as dividends to individual shareholders or entities that have a stake of less than 25%.

2. Company founded in One Line of Business
This can be done considering that many countries, including Indonesia, provides that the division of inter-corporate dividends (inter-corporate dividends) is not taxable. The way it works as one example. PT X pulp mill, paper mill PT Y and Z is the distributor PT, then they can be arranged between a number of profit (margin) that can ease the tax if they are. After the new distributed in the form of dividends.

3. Portrait Future Prospects
Tax planning is done is to reduce the tax burden will be borne on the company's present and future. If the prospective company's profit in the future, then the tax planning needs to be done so that the tax burden can be reduced effectively by emphasizing aspects of the material aspects for Income Tax Income Tax Board of the Agency has a relatively high rate of 30% if the income above the level of Rp. 100 million.
But when the company was operating at less favorable, or has suffered a big loss either way or accumulated losses of large losses, the tax burden itself Income Tax Agency will be reduced so that tax planning is more emphasis on aspects of cutting and casting. Hence, in the start, you might have to make some tax planning design that can be done. You can start with the flow if A then X, if B then Y and so on

4. Revenue and Expense Define Your Company
Defining Revenue (income) and Expense (cost) here is to identify the type of company revenues and costs associated with article 4, 6 and 9 of Act No. 17 of 2000.
a. Accounting income divided by the tax laws into two major groups namely the tax object and not the object of tax.
b. Further objects have imposed taxes Final Income Tax and not final
c. Cost accounting is divided by a deduction from tax laws gross income and is not a deduction from gross income.
The identification is done in order to estimate the income tax payable Agency for more precise future because of the fiscal corrections carried out in these estimates.

5. Inventory Management
Inventory plays an important role in tax planning. In general, industry in Indonesia has not been able to minimize inventory because of concerns the company was not able to make timely delivery, because of the many factors that can cause inhibition of the company can not make delivery on time. In addition there are also companies that have made the provision of supplies because of the nature of the industry. Tax planning so that the inventory is not aimed solely at the election of stock assessment methods according to the FIFO taxes and Average, but can use the inventory management instrument itself.
A good supply management, especially in determining the cost of supplies will have an impact on corporate profits. The impact of taxation on stock option calculations have also been summarized in the previous example. Besides the problem of recognition and valuation of inventory, the company's management should also focus on the number of stocks owned by the company. Because the amount of excess inventory or excess inventory will increase the handling costs and increase the risk of losing the company supplies.
Problem of excess inventory but not in terms of operational benefits can also be viewed from the aspect of corporate finance. This can be understood because each USD 1, - financing of inventories must be financed Rp1, - the obligation or equity per company. So that if management can improve the effectiveness of supply management company's financial condition as a whole will improve, although the increase in the effectiveness of corporate tax liability could increase. But the biggest advantage remains firm.
Example:
The Company has a stock of Rp 20 billion, the Company improve the effectiveness of supply management so that the ideal inventory level can be reduced by 20%. What is the company's profits if the cost of corporate debt is at 10% and the effective corporate tax rate is 30%?
Answer:
Decrease in the level of company stock acquired was Rp 4 billion (20% * Rp.20 billion). Gains, obtained on these savings amounted to Rp. 400 million (Rp.4 billion X 10%), as for after-tax profits earned by companies is Rp.280 million ((1-30%) x Rp 400juta). As such, the company obtained a net profit of these savings amounted to Rp 280 million per year.

6. Purchasing Assets
When the purchase is an important asset in doing tax planning, it relates to the recognition of the start of depreciation which affects the amount of depreciation costs will be reported. Good planning in conducting capital expenditures (capital expenditure) will be able to reduce the tax payment obligations borne by the current year.
This is permitted by the Taxation Act, Act No. 17 of 2000, Article 11 paragraph (1) which states that the depreciation on the expenditure for the purchase, construction, additions, repairs, or changes in tangible assets, except land status mi9ik rights, use rights building, right to cultivate, and the right of use, which owned and used to collect and maintain the income that has a useful life of more than 1 (one) year conducted in part-equal parts during the benefits that have been determined for such property. Whereas Article 11 paragraph 3 states beginning in the month Depreciation expense was doing, except for property which is still in the process of, depreciation starts in the completion of the work of such property.
Thus, when the company made a purchase or capital expenditures should be conducted end of the month, so the depreciation costs for the month can be recognized in full while we spend the cash can be carried out at the end of the month.

7. Depreciation of Fixed Assets
In some industries, especially capital-intensive industries, depreciation, it is quite dominant, because he could become the largest portion of the cost components of the company. Treatment and measurement of this depreciation, for further accelerate this depreciation expense allocations in financial reports will be more profitable corporate finance. Therefore, the depreciation in terms of time, the sooner the better, and in terms of depreciation rates the greater the better.
Depreciation is the systematic allocation of the depreciated amount of an asset. Whereas all time is "asset in terms of noodles are fixed assets, i.e tangible assets acquired in the form of ready-built or the first, which is used in company operations, not intended to be sold in the normal course of business and has a useful life of more than one year. There are many methods of depreciation, which is basically an attempt to allocate costs in a more reasonable and rational.
However, according to tax regulations, the application of depreciation methods have several limitations, namely:
a. Residual value. Theoretically, the use of assets at the end of the period may still have value that can be realized by the company, by selling these assets at the end of the period or to be upgraded to modify it according to the particular technology. For some types of asset value can be material. However, the tax provisions, ignoring the remaining value of this asset, so that the residual value in the calculation of depreciation for tax provision is always 0 (zero).
b. Benefit period. Cost allocation which does aim of this depreciation of assets targeted in length can be utilized or contribute to the company. The duration of this asset utilization, although the same types of assets can vary, this depends on the utilization of these assets economically. For example minibus vehicles used as official vehicles used by managers as an operational vehicle. Despite the differences in the benefits, tax provisions ignore it. Tax provisions to determine the useful life of assets in accordance with the asset group in accordance with the criteria of taxation.
c. Performance. Contribution of assets that can be utilized by our company based on the value of the asset performance of the acquired company's revenue. How to measure the performance we can do this by comparing the results obtained from these assets with the technical estimates that can be generated by these assets. For example a photocopy machine has the technical ability to be able to copy the year when the engine had 100,000 sheets of copy paper. If the year has been the engine copying of 25,000 sheets, then we can make depreciation of 25% of the machine cost. Although, technically, such calculations can be done, the tax provisions in terms of depreciation, does not recognize the method based on this performance, or combined with this method. Therefore there are only 2 methods related to the depreciation recognized for tax purposes. Both methods are:
1. Straight-line method
2. Declining balance method
Deviation method can be done in a certain business decisions based on the Minister of Finance. Straight line method of depreciation is the method of allocating the cost of depreciation by dividing the load as much of the time the asset utilization. Depreciation basis is the acquisition price.
P = (HP-NS) / MM
P = Depreciation
HP = Price of Acquisition
NS = Value of Time
MM = The Benefits
In accordance with our previous explanation, then the NS depreciation tax purposes is zero, while for the useful life of assets refers to the grouping which has been determined by the tax provisions. Decreasing Balance Method (MSM) is an accelerated depreciation method, if the calculation with MGL obtained a certain percentage of depreciation, then the above percentages are multiplied by using MSM 2 (double) and if the basic MGL depreciation is the cost basis in the MSM is the value of depreciation Book Early.
Percentage Percentage Depreciation Depreciation MSM = MGL X 2
MGL = Percentage Depreciation Depreciation / Acquisition Price.

Example calculation:
Company on January 28, 2003 purchase of fixed assets in the form of a sack-making machine, this machine is obtained by excluding the costs as follows:
• The cost of Rp 250 million machines.
• Cost of transport machinery from Japan amounted to Rp 20 million
• Insurance costs Rp. $ 10 million of transportation
• Cost Instaiasi Rp 20 million
• Cost of the experiment until the engine can operate normally USD 20 million
Thus, the acquisition price of these machines are all relevant costs incurred by the company so that the machine is ready to operate.
Machine acquisition cost was Rp 320 million. In accordance with the provisions of taxation, the machine is included in group II, which can be depreciated over 8 years.
The amount of depreciation each year when using the Straight Line Method:
P = (HP-NS) / MM
P = (320 jt-0) / 8
P = 40 million

Things to note in using the depreciation method at the end of MSM is the depreciation period, the end of the book value should be zero. Therefore, although mathematically still balance at the end of the 8th, but the value should be zero. Therefore all the remaining book value at the end of the seventh year are depreciated entirely in the eighth year.

7.a. Assets Group Intersection
Allocation of depreciation costs can vary from one company to another company, record companies generally different treatment time for the same asset because of differences in the estimated useful life doing.
Fixed assets are grouped into the following sections:
A. Not Building
• Group 1
• Group 2
• Group 3
• Group 4
B. Building
• Permanent
• No Permanent
Sometimes an asset can be entered in two or more groups as stipulated by the provisions of taxation. Determination of a shorter time in doing this cost allocation in the form of depreciation, the company will be more beneficial financially. So the sooner an asset is depreciated, the more the company's financial burden.
Example: The company makes a purchase of assets of Rp. 500 million assets can be depreciated over 8 years old or over 4 years, if during the 8 years the company expected to earn profit before depreciation is stable in the amount of USD 500 million, what difference will the tax burden borne by companies when using the shrinkage during the 8 years of over 4 years?
Finance the difference will be greater if the value of depreciated assets and the difference is greater the longer the time of depreciation. It's just that in determining the age of an asset we can not freely decide, because the tax provisions have set this in the Minister of Finance Decree No. 138/KMK.03/2002. Yet there are several types of assets that are in the intersection of the benefits of such provision, so that tax planning can be done to the grouping of assets that are in the intersection.

7.b. Depreciation Method Selection
The difference in looking at the speed of an asset is obsolete or the ability of the asset in contributing to the company's earnings can be influential in determining the tariff to be charged in the depreciation. In determining the accuracy of accounting rates is a reflection of the principle of matching costs against revenue. Only in the imposition of the tax aspects of a larger tariff would be more profitable company than the financial aspect because it will be able to reduce the financial burden of paying corporate taxes.

Here we tell the difference.
Companies make a purchase of assets of Rp 500 million, assets can be depreciated over 4 years with a straight-line method or declining balance accelerated (double-declining method), if during the next 4 years the company expected to earn profit before depreciation is stable in the amount of Rp. 500 million, what difference will the tax burden borne by firms when using the Straight Line depreciation method than the accelerated depreciation method?
Difference financial burden suffered by the company if the company uses the straight-line method of depreciation at the accelerated depreciation method. The greater the difference in depreciation rates the greater the difference in the financial burden of tax payment.

Hostage-taking (Gijzeling) or Forced Agency to the Bad Delinquent Tax

2009-10-09T11:13:00.001+08:00

Introduction
We have already entered the end of quarter three in 2009. As a government institution in charge of collecting taxes for the sake of continuity of government activities, the Regional Office of Directorate General of Taxes in East Borneo and the Tax Office in East Borneo more incentive to carry out these duties by making efforts to achieve tax revenue target in 2009.

The efforts to achieve tax revenue target was done with 3 (three) ways, namely: First, make a tax extension, the second, intensification and the final tax to conduct law enforcement in tax (law enforcement) by inspection, investigation and collection taxes.
Tax extension is an attempt to increase the number of registered taxpayers so expect the number of tax payments will increase from the new taxpayers. While taxes are intensifying efforts to increase tax revenues with the potential taxes that have not been reported and have not paid for by taxpayers who have already registered. While the third attempt, law enforcement in tax (law enforcement) is to apply tax penalties, both administrative sanctions in the form of interest / penalties or criminal penalties against taxpayers who violates the provisions of tax laws.
One law enforcement efforts in the field of taxation that are actively implementing the tax collection starting from a reprimand, the issuance of coercion, confiscation, account blocking, prevention of foreign travel and hostage-taking (gijzeling) or force the body.
In this paper will discuss only the active charging action of the hostage (gijzeling) or force the body. This needs to be known by the public because taxpayers recently Regional Office of Directorate General of Taxes in East Borneo has sent a circular letter to the Tax Office in the entire region of East Borneo to assess the implementation of the hostage (gijzeling) or the forced loss of Delinquent tax-naughty does not want to pay off his tax debt in pursuit of tax revenue target only the remaining time 3 (three) months. Hopefully with the hostage-taking action later then the tax Delinquent naughty likely to immediately settle his tax debt prior to the insurer tax standoff.

Hostage-taking (Gijzeling) or Forced Agency

What is a hostage (gijzeling) or force the body?
Hostage-taking / forced agencies or in the Dutch language is called gijzeling is temporarily curbing tax freedom by placing Person at a particular place. The definition of a particular place that is:
a. closed and isolated from society;
b. have limited facilities and
c. has a security system and adequate supervision.
Before the standoff is formed, Responsible Tax hostages deposited in the state prison house (crease) and separated from other prisoners.

Person Anyone who is liable to tax hostage / forced loss / gijzeling?
Hostage-taking can only be done against the Person Number:
a. Tax debt of at least one hundred million rupiah (Rp. 100,000,000);
b. Undoubtedly good faith to settle the tax arrears;

How long standoff / forced loss / gijzeling?
Hostage period forever 6 (six) months as from the following institutions located in the Tax hostage and renewable for a maximum of 6 (six) months.

Are the rights of Taxes Person for the hostages?
Person rights Tax hostage during the period are:
a. Conduct of worship in crease;
b. Appropriate health services;
c. Decent food;
d. Reading material / information at his own expense;
e. Visits clergy / personal physician at his own expense;
f. The visit family / friends / lawyers three times a week each for 30 (thirty) minutes;
g. File a complaint;
h. Hostage-taking should not be done in the case of PP was worship, following the formal hearing, or are participating in elections;
i. Can be treated at a hospital outside the crease when suffering from illness / mental disorder with written permission Tax Office Head;
j. In the case of sudden illness severity and need help quickly, can be directly taken to the hospital without the consent of the Head Tax Office;
k. Medical care during the period outside the crease is not counted as the hostage.

Does the person in the tax liability during the hostage?
Obligations or restrictions underwriter during the hostage tax is:
a. Required to meet the order and discipline in the crease;
b. Prohibited from carrying cell phones, pagers, computers or other electronic device that can be used to communicate;
c. If it can escape being held hostage again by paying the costs incurred because they will escape;
d. During the run is not counted as the hostage.

Is hostage can be stopped before its time is over?
Hostage-taking can be stopped even though the standoff has not ended. The terms are:
a. Tax debt and tax collection fees have been paid in full;
b. Since the court decision that has incracht;
c. Because the specific considerations of the Minister of Finance, certain considerations are:
a) has paid at least 50% of the tax debt and the remainder will be paid in installments;
b) able to pay off the tax debt by submitting a bank guarantee;
c) able to pay off the tax debt by submitting his wealth worth the tax debt;
d) Person in taxes has been 75 years of age or older;
e) For the purposes of the state's economy and public interests.

Thus briefly related information office of the Directorate General of Taxes efforts in East Borneo and the entire staff in order to secure tax revenue in the province of East Borneo in 2009, especially law enforcement actions in the field of taxation in this standoff. Course of action in this hostage-taking attempt in addition to one of the other measures as described above.

Tax Planning Theory and Issues

2009-10-08T11:11:00.000+08:00

According to Stephen J. Rice in his book "Introduction to Taxation - A Decision Making Approach". Tax Avoidance is often referred to as Tax Planning. Tax Planning is: "The process of controlling your actions so as to avoid tax undesireable consequences. Tax avoidance is completely legal activity. "Another definition according to the International Tax planning Tax Glossary Tax planning is the arrangement of a person's business and / or private affairs in order to minimize tax liability.

In other words, tax planning is an effort made by the company to efficiently tax burden so that does not violate any legal regulations. Tax planning is applied to the operational management (routines) and the company at the time the company will solve a specific problem or have a specific policy.
To minimize the tax liability can be done in many ways better still comply with the provisions of taxation (lawfull) or in violation of tax laws (unlawfull). The term is often used is tax avoidance and tax Evasion.

Next Nightingale in his book Taxation, theory and practice to explain differences in tax avoidance and tax Evasion and connection with tax planning as follows:
Tax avoidance is the legal arrangement of the Taxpayer's affairs in order to minimize the tax liability, whereas Tax Evasion is illegal. Sometimes, however, the borderline between avoidance and Evasion can become blurred.
Tax Evasion involves the intentional disregard of the legislation in order to escape the liability to tax. Tax Evasion may be Achieved by understating income, overstating expenses, making false claims for allowances or failing to diselose a charge ability to tax. Many forms of tax avoidance are merely tax planning opportunities that exist in the legislation for reducing the liability to tax, for example, choosing the most tax efficient savings and investments or making sure that all available reliefs are used to their full advantage, "

The things that must be considered in a tax planning, namely:
1. Not violate the provisions of taxation.
2. In business sense, since tax planning (tax planning) it is an inseparable part of the comprehensive planning (global strategy) both companies long term or short term.
3. Evidence of adequate support, for example: agreement, invoice and accounting treatment.

What motivates to do tax planning?

A. Wisdom of Taxation (Tax Policy)
Tax policy (tax policy) is an alternative from going to the intended target in the tax system. From the various aspects of tax policy, there are several factors that encourage a tax planning (tax planning), namely:
1. Tax collected.
This is about types of taxes paid each of which have the property tax treatment on their own. So in order not to disturb the company's cash flow needs a good tax planning in order to analyze what the transaction will be subject to tax what and how to fund that is unknown how the net income after tax.
2. Who would be subject to tax?
Given Indonesia is one country that embraced "the classical system" where there is a separation (separate entities) between business entities with shareholders, which will lead to double taxation.
3. What have been the object of tax?
The existence of different tax treatment of tax objects which are essentially the same economies will lead to tax planning efforts to lower the tax burden.
4. How much tax?
Existence Schedular taxation rates applied in Indonesia resulted in a tax planner will try as far as possible subject to the lowest rate (low bracket)
5. How does this work?
This is associated with the self-assessment system and payment system that requires a tax planner to plan properly taxes, considering the collection system (withholding) is feared to disrupt the improved cash flow to obtain restitution which takes time and costs.

B. Tax law (Tax Law)

Assume that the fact that wherever there are no laws that govern every activity perfectly, so in practice is always followed by the other provisions (PP, KMK, Kep Directorate General of Taxation), it is not unusual for the implementation of these provisions conflict with the law themselves as adjusted to the interests of policy makers in achieving the other goals to be achieved. This situation led to the emergence of a gap for Taxpayers to analyze carefully the opportunity to use a good tax planning.

C. Administration of Taxation (Tax Administration)

Because Indonesia is a developing country it is still difficult to carry out an adequate tax administration. This encourages companies to implement good tax planning to avoid the administrative and criminal sanctions because of differences in interpretation between the tax authorities (fiscus) with the taxpayer so widely by the applicable tax laws and information system which is still effective.

Four variables which determine the tax consequences of business transactions:

1. The entry variable: Entities which carry out transactions?
a. Income Shifting
Tax on income from business activities can be reduced if income is transferred from an entity with a high tax rate to a low tax entity rate.
b. Shifting deductible
Entities with different marginal tax rate can save not only by transferring income to them but also to move his deductible expense.
c. Constraints on Income Shifting
Because the transaction involves the transfer of income shifting value from one taxpayer to another taxpayer. Usually occurs in a special relationship (related party)
2. The time period is variable: In the tax year in which the transaction occurred?
3. The jurisdiction variable: Including aspects of tax law where the transaction occurred?
4. The character variable: What is the nature of tax on income from transactions that occur?

Of variables mentioned, the company can develop a strategic tax planning, namely:
a. Tax burden falls (and cash flow increases) when the income is derived from the entities subject to lower tax rates.
b. Present value in time, the tax burden falls (and Cash Flow increased) at the time the tax liability (tax liability) in suspended until the next tax year.
c. Tax burden falls (and cash flow increases) when the income earned in a law with a low tax rates.
d. Loading of taxes down (and cash flow increases) at the time of taxable income with special rates because of its nature.

Resistance to The Imposition of Tax

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From the microeconomic side, the tax can be seen as a burden, something that can reduce the ability or the people's purchasing power. Therefore, virtually no one is willing and sincere to reduce the resources to pay the tax. And that makes the community to take measures to avoid it. According to Sri Pudyatmoko (2002: 71) resistance to the tax can be grouped into three, namely:

1. Passive resistance, the resistance efforts of taxpayers who do not actively do much less aggressive, but rather the opposite. This is the barriers that complicate the tax collection and is usually associated with a country's economic structure, development and intellectual and moral education of the people, and a taxation system that is not easy to apply to the relevant community.
2. On resistance, the efforts and actions that are directly addressed to fiscus in order to avoid taxes. Resistance of this type there are three kinds, namely:
a. From tax evasion, this is done in a variety of ways, such as a juridical restraint. For example, if the alcoholic beverages are taxed, then people will hold back by not buying or consuming alcoholic beverages. Or also by seeking legal gaps (loop holes) of the law to avoid taxes. This resistance does not violate the law.
b. Evade the tax, which is to take measures to not pay taxes by illegal or against the law. For example engineering books, falsifying documents, smuggling, and others.
c. Neglect of tax, ie tax effort does not meet the formal obligations that should be their responsibility associated with self-assessment system. For example not report that the Notice can not do the calculation and collection of income subject to tax. This action is a violation of tax laws that could be subject to sanctions.

Taxpayers Compliance

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A. Understanding Taxpayer Compliance
Compliance problem is something related to the statutory provisions. From the above tax concept, where the tax should be levied according to law, then compliance is related to the tax itself, since the tax rules that apply. Because of the usual laws, there is set of obligations and prohibitions that must be obeyed by the people associated with the tax itself.

Understanding of compliance according to Milgram was quoted as saying Koswara (1986:193) and Chaizi Nasucha (2004:131) is obedience to authority or rules. In tax compliance can be interpreted as the degree to which taxpayers comply with tax laws (Horn, 1999: 13). Compliance indicates the influence of individual power explicitly. Compliance is also a typical response of the individual against another individual status and a higher power.
Tax compliance by the International Tax Glossary (1992:296) as quoted Chaizi Nasucha (2004:131) is the level that indicates the taxpayer does not comply or adhere to the tax rules in the country. For example, in the amount of the income statement or include the Notice (SPT) taxes in a given time. Hasseldine (1993: 424) states that compliance is to report all tax assets recorded at the specified time and returns the report accurate tax liability, according to the revenue code, regulations and court decisions applying at the time of recording.
From the above understanding, the authors concluded that tax compliance is the honesty of taxpayers to calculate, calculate, deposit and report the tax payable correctly, clearly and completely in accordance with tax laws made by a higher authority (Parliament and Government).

B. Taxpayer Compliance Theory.
The theory of tax compliance in general can be classified in the theory of coercion and consensus theory. According to the theory of coercion, the tax provisions will be adhered to society because of the element of coercion that is legal authority of the ruler. This theory is based on the assumption that the monopoly of force as the ruler is an order creating the basis for legal purposes. So according to the theory of force, elements of the sanctions is a factor that causes people to comply with tax requirements. The problem, if a rule of law / regulation is only based on the demands his obedience to sanctions law / regulation, it would reduce the authority of the laws /regulations, both to the law / regulation itself or the law enforcement /fiscus. Often law enforcement and compliance of treatment would be false because not rooted in social values that exist.
While the consensus theory, basic obedience is the law on public acceptance of the legal system, namely the legal basis of law. Tax collection has a trait that can be imposed because its implementation is based on the law. Because the tax collection system in our country based on self-assessment, the collection of the coercion can not be implemented. That's because taxpayers voluntarily given freedom to calculate, calculate, deposit and tax reporting obligations. Fiscus only supervise the taxpayer on the basis of certain criteria. So the force is only made to the taxpayer on the basis of monitoring results with certain criteria, suspected non-compliance with tax regulations. Therefore our country embraced the tax collection are two theories, namely the theory of coercion and consensus theory.
While Araujo (1985: 1-5) as quoted by Chaizi Nasucha argued that the tax encourages tax obligations in a timely and voluntary is because of an efficient tax management. In order for an effective taxation system, the majority of taxpayers will obey him. Very profitable for the state to assist taxpayers who comply and meet the tax obligations rather than using more resources to pursue a minority of taxpayers who do not obey. Many taxpayers are actually willing to be obedient taxpayers, but hampered by the lack of these taxpayers to fulfill their obligations.
Also according to Brooks, as quoted by Chaizi Nasucha, states theoretically can tax compliance in terms of economic theory, theories of psychology and sociology theories. Economists and psychologists see Taxpayer compliance issues from individual views, whereas sociologists see the problems of compliance of the review variations of human behavior in social systems. Broadly speaking, the third division of the theory are discussed as follows:

1. Economic theory; that taxpayer compliance is based on the principle of rationality of behavior, that is every human being opportunistic behavior behind the decision to comply or not the tax obligations. Based on this principle, individuals will maximize profits with minimum costs. Consequently, economic models to approach the problem of tax evasion based on the economic preferences of individual choices to avoid taxes. In addition the complex tax rules and tax payers require complex active role in understanding and implementing. So the complexity of tax laws has consequences in the form of high compliance costs to taxpayers incurred.

2. Psychological Theory; theory assumes that individuals are moral behavior. Ideas and values it has, orders, and the filter impulse is influenced by a moral view. Next moral views affect individual behavior and perception. Assumption psychologist regarding compliance with tax obligations is that the compliance or non-compliance is simply caused by the habit, a tendency to do things more easily, and indifference. Psychologically there are barriers to adherence will someone implicit tax obligation in attitudes, trends, beliefs and values that appear in behavior. Attitudes, beliefs, and values will be developed during its formation.

3. Sociological Theory; this theory explains human behavior by looking in the position, ie they are in a system. This means that the sociologist to develop the basic economic model for the control of a crime and are looking at a point that the law is not the only source of punishment and reward. This theory suggests that one's tax liability will be developed on the pattern of the more important cultural society, namely delayed gratification, extensive social relations, and who value performance than individual privileges. Conversely, someone who developed the culture that loves the processing ability of individuals, looking for something quick to give results, individualism in social relations tend to show the attitude and character in connection with his tax obligations.
According to Xin Zhiang in Chin and Choi (1998:85) as quoted by Chaizi Nasucha, considered that non-compliance is an unlawful behavior (law breaking behavior). Therefore, the control is the starting point for understanding the problems of non-compliance. Control is important in order to minimize opportunities for cheating. Control function to minimize the chance of cheating is actually a tax administration purposes. Because of good tax administration will be able to detect the occurrence of non-taxpayers, such as the existence of early warning (alert systems).
The fact is that someone will make cheating in tax liability if there is a chance. Although there are some people who consciously paying taxes as a legal obligation. Xin Zhiang still think that the approach to the control can be done in two ways, the normative approach and a rational approach. Normative approach based on human behavior as subject to direct and control the social norms and rules into the form of normative control. While the rational approach based on the individual properties in a rational decision, namely the tendency to maximize self-interest.
The third constraint as described above has led to taxpayer resistance to the tax obligation of self-assessment system, such as adherence to calculate, calculate, pay, and report the tax obligation.
According to the description as quoted by Toshiyuki and Chaizi Nasucha, to measure the condition of the taxpayer compliance based approach to economic rationality, psychology, and sociology as the description above, there are the dimensions of compliance as follows:

1. Taxpayer compliance is fundamental;
2. Conditions tax reporting;
3. Conditions of tax payments;
4. Taxpayer response to the inspection and collection;
5. Conditions of financial management;
6. Finance working conditions;
7. Condition of non-governmental organizations / NGOs;
8. Understanding of the people other than the taxpayer about taxes.

C. Compliance by Tax Regulations
Of understanding and taxpayer compliance theory discussed earlier, it can be concluded that the expected actual compliance is voluntary compliance for taxpayers to realize how important the tax for the holding of public service and governance. However, if it appears non-compliance or even resistance to taxes, the government as the authority may make efforts to implement coercive law enforcement. But even so, efforts by the government coercion should refer to the rules agreed upon between the government and Parliament which are representations of the people in democratic countries. So that these efforts did not lead to tyranny or injustice that it could cause a drop in the tax authority and the authority of the tax rules. And with the collapse of authority and the tax authorities of tax rules, then it in turn causes non-compliance or even resistance to the tax itself.
In accordance with the terms of taxpayer compliance that have been discussed above, where significant tax compliance compliant with tax laws, the tax laws referred to are the tax laws and implementing regulations below. The law in question is:

1. Act Number 6/1983 on General Provisions and Tax Procedures, as last amended by Act Number 28/2007.
2. Act Number 7/1983 on Income Tax, as last amended by Act Number 17/2000.
3. Act No.8/1983 on Value Added Tax and Goods and Services Sales Tax on Luxury Goods, as amended by Act Number 18/2000.
4. Act Number 18/1997 on Regional Tax and Retribution, as last amended by Act Number 34/2000.
5. Act Number 21/1997 on Customs Acquisition Rights to Land and Buildings, as last amended by Act Number 20/2000.
6. Act Number 12/1985 on land and building tax, as last amended by Act Number 12/ 1994.
7. Act Number 13/1985 on Stamp Duty.

The author of this article is the topic of taxpayer compliance with the primary focus is the income tax in Article 25 Board. Therefore, to be described in this section is the taxpayer compliance is regulated in the Republic of Indonesia Act Number 6/1983 concerning General Provisions and Tax Procedures, as last amended by Act Number 28/2007 and Act Number 7/1983 on Income Tax, as last amended by Act Number 17/2000.
In the Act on General Provisions and Tax Procedures, hereinafter abbreviated KUP Law, the author found there are 44 obligations and restrictions that must be obeyed taxpayer. While the Act there are 27 income tax obligations and restrictions. If all obligations and restrictions are not obeyed, then there will be sanctions imposed by the tax authorities / government, where sanctions can include interest, fines, increases, confinement or imprisonment depending on the degree of rebellion.

Tax Collection System

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In order to better understand the tax collection system, the authors will discuss the first taxes stelsel more. Because the discussion of the tax collection system is inseparable from the notion of taxes stelsel. And used a certain tax stelsel choice will bring a certain tax collection system as well. According to Sri Pudyatmoko (2002: 57) tax stelsel there are three kinds, namely:

1. Real Stelsel, which is a tax based on the state of the real object of the tax. If the object of income, the imposition of income based on who really accepted by the taxpayer.

Therefore can not be done at the beginning of the tax collection period / tax year in which during the period / fiscal year and state the number of objects is still very possible tax changes. Stelsel system so that it will impose a tax at the end of the period / fiscal year after income actually became real. The advantages of this system is not harmful to taxpayers in the event of a change of circumstances during the tax object / the tax year, did all the changes it still be considered in determining the amount of tax. While weaknesses are delayed tax money into the state treasury because of the new acceptable at the end of period / tax year.

2. Assumption stelsel (fictieve stelsel), which is a tax based on a presumption of law (fictie) specific. But even if basic is the assumption (fictie), but this assumption is not necessarily and carelessly. Fictie law used this example assume that the income received by each taxpayer is the same amount for each tax year. Therefore, once the tax year has ended and can be known amount of income from taxpayers concerned, it can be determined for the income tax next fiscal year. Thus this stelsel implementing taxation system in front. To changes that occur during the period / fiscal year that does not affect the amount of tax at the time / year. The advantages of this system is the tax funds can immediately go to the state treasury that can directly finance the ongoing development in these years. While its weakness is that it can hurt taxpayers and the state in the event of a decrease / increase in income in the period / year.

3. Mixture stelsel, which is a combination of two kinds stelsel described above and at the same time an attempt to eliminate the weaknesses of the two previous stelsel. This stelsel wearing basing the tax debt in the early fictie / tax year which is a temporary provision, which after the end of period / year tax situation will be corrected on the basis of actual income received by taxpayers. The consequence of this stelsel is taxing in front and behind as well.
In the following sections will discuss the tax collection system, where the tax collection system is not only limited to the issue of time as has been mentioned in the description of stelsel taxes, but also about the authority and responsibility to calculate and determine the amount of tax debt.

As it is known that the known existence of some tax collection system, namely:

1. Official assessment system, which is a tax collection system that gives authority to the government (fiscus) to determine the amount of tax payable by the taxpayer. The characteristics of this system is authorized to determine the amount of tax on fiscus, passive taxpayers and the tax debt arose after the determination letter issued by fiscus. This system is generally applicable to the types of taxes that involve the wider community in which they are deemed unable to be assigned the responsibility to calculate and impose taxes.

2. Self assessment system, which is a tax collection system that gives authority to the taxpayer to determine their own amount of tax payable. The characteristics of this system is the authority on their own taxpayers, current taxpayers from counting, setting their own and the tax and deposit fiscus just watching.

3. Withholding system, the tax collection system that gives authority to a third party (not fiscus and concerned taxpayers) to calculate, determine and deposit the amount of tax debt to the taxpayers concerned.

Tax Treatment Against PE/ BUT

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Taxation system in Indonesia is adopting two principles, namely the principle of domicile and the principle source. Based on the principle of domicile, Indonesia to tax the entire population regardless of whether the income derived from domestic or overseas. While based on the principle source, Indonesia impose a tax on all income derived from Indonesia without regard to the compulsory tax.

PE/BUT a foreign taxpayer who derives income from Indonesia from activities or businesses in Indonesia. Because doing the activities in Indonesia BUT tax obligation equal to the taxpayer in the country. PE/BUT also obliged to register themselves to obtain NPWP, must be a cutter, cut the tax deposit and reporting, and shall include the Annual Income. The difference between domestic taxpayers with PE/BUT dlam is, the domestic taxpayer is taxed on income from business or activities around the world, while PE/BUT only on income earned or received from the business or activities in Indonesia alone.

Tax Object for Permanent Establishment
In Article 5 paragraph (1) No Income Tax Act. 10 In 1994, mentioned that the tax object is a permanent establishment:
a. income from business or activities of the permanent establishment and from property owned or controlled:
b. income from the central office of the business or activities, sales of goods, or provision of services in Indonesia are similar to those executed or done by the permanent establishment in Indonesia.
c. income as mentioned in Article 26 received or accrued by the head office, as long as there are effective relationships between the permanent establishment to the property or activities referred revenue.
Of the three types of taxable income to the PE/BUT, two of which are income headquarters. Several categories of income that can be attributable to the PE/BUT and the way income PE/BUT attributed include attribution:
a. based on facts (attribution by fact),
b. based on the forced withdrawal (force of attraction) and
c. based on effective relationship (effectively-connected income).

1). Taxable Income Attribution
(a) Income from business activities (business activity)
Real income which includes income from the PE/BUT is PE/BUT activities and income from property owned or controlled. The term "business" in a comprehensive manner as all the activities to earn revenue or profits of the company by producing goods and services needed in an economic system.
(b) Income from property owned or controlled by that attributable to the PE/BUT
Attribution based on the facts (Article 5 (1) (a)) committed against business income or activities that really worked (earned) by the PE/BUT. In the attribution including property owned (for example, PE/BUT there is in the balance sheet) or controlled property (such property in the supervision, management or administration of PE/BUT).
2). Revenue is attributed by the withdrawal force (force of attraction)
Furthermore attribution with the withdrawal provisions of force (force of attraction) applied to income from the sale of goods or delivery of similar services (with the done by PE/BUT) by the head office in Indonesia. This provision is to prevent the avoidance of Indonesia taxation by foreign taxpayers (which has a PE/BUT in Indonesia) in a way to by pass PE/BUT with a variety of considerations.
The concept of "Force of Attraction" is suggested by the UN model, assuming the law, that if the goods or services in transactions by the central office with transactions conducted by the PE/BUT, the income from the transactions carried out directly by the central office are regarded as PE/BUT penghasiian PE/BUT.

3). Income attributable based on effective relationship (effectively-connected income).
Further in accordance with the provisions of article 10, 11 and 12 of OECD Model Treaty, Article 5 (1) (c) attribute some categories of income as mentioned in article 26 (such as dividends, interest, royalties) earned the Central Office in Indonesia) if there is a relationship Effective between the PE/BUT with activity or activities of such income provider. Model treaty Article 5 (1) (c) refers to the license agreement between the Office domestic taxpayers Indonesia and the allocation of management fees by the PE/BUT to the domestic taxpayers. Because these provisions effective relationships, Article 26 of income subject to Income Tax Office on PE/BUT a net basis and progressive rates. Meanwhile, in accordance with the provisions of Article 26 (5), article 26 Income Tax deduction on income that is effectively connected (the original final), can be credited against the final tax debt PE/BUT.
Considered as income PE/BUT, if there are effective relationships between the permanent establishment to the property or activities that provide income, including income subject to "withholding" under Article 26 of the law of income tax. "Effectively connected income," the concept comes from the tax laws of domestic United States' Internal Revenue Code ".

Permanent Establishment (BUT)

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Based on Article 7 of the OECD and UN Model, above an operating income shall be taxable only country of domicile. Except for the business activities conducted in the source country through a permanent establishment. So in general can be said that for the income derived from business profits, imposition of the tax would be largely determined by the presence or absence of a permanent establishment in the source country. PE/BUT understanding of existence is relevant.

A. Permanent Establishment in the Income Tax Act

As stipulated in Article 2 paragraph (5) Income Tax Act, which referred to the Permanent Establishment (BUT) is a business form used by individual foreign citizens not residing in Indonesia or Indonesia are not more than 183 days in 12-month period, or agencies or foreign companies domiciled in a foreign country to conduct business or activities in Indonesia.

Permanent Establishment can be:
a. place of management;
b. Branch company;
c. Representative Office;
d. Office Building;
e. Factory;
f. Repair;
g. project construction, installation or assembly;
h. Mining and extraction of natural resources, drilling work area used for mining
exploration;
i. fisheries, animal husbandry, agriculture, plantations, or forestry;
J. Providing services in any form by employees or by others, all made more than 60
in a 12-month period;
k. person / entity who acts as an agent whose position is not free and
l. agent / employee of an insurance company not established position in
Indonesia who receives insurance premiums or risk in Indonesia.

PE/BUT the definition contained in the notion of a place of business (place of business) which is fixed. These businesses do not have to be an office, but can also shape the plant, machinery or equipment. PE/BUT also includes service activities performed in one or more of Indonesia on behalf of the employer who are domiciled outside the country through its activities last more than 60 (sixty) days within a period of 12 (twelve) months. 60-day period will not be continuing but can take place intermittently.

A person or an entity which is not free agents who act on behalf of an overseas company is also a PE/BUT. Are not free agents implies that the agent is not acting entirely within the framework of his own, but acting on behalf of foreign residents. Similarly, an employee or agent in Indonesia from an insurance company domiciled abroad will be considered PE/BUT if the company receives premiums from or risk in Indonesia. Risk taking in Indonesia means that the insured is residing or domiciled in Indonesia, while the events that lead to risk do not have to be in Indonesia but it may be abroad.

B. Definition of Permanent Establishment The Taxation Agreement (Tax Treaty)

Based on international tax law, income derived by a resident of a state shall be taxable only country where the subject of the tax domicile, however, also be a source country taxing right if people are running businesses in the source country through a permanent establishment. Determination of a place of business / activities considered as a permanent establishment or not is determined by negotiation results in a tax treaty between countries. However, in determining or making a tax treaty refers to international norms in the practice known that there are two kinds of contract models, the UN Model and OECD Model.UN usually adopted by developing countries and the OECD model adopted by developed countries.
In practical to determine the presence or absence of a permanent establishment is to use some of the following tests:
a. Asset test (assets - permanent establishment type);
b. Activity test (activity - PE type);
c. Agency test (agency - PE type) and
d. insurance agent.

a). Permanent Establishment "Physical Facilities"
PE/BUT this group characterized by the existence of physical facilities (assets) which is the place to do business or conduct activities in Indonesia foreign taxpayers company. PE/BUT so often called "asset type" PE/BUT. Such businesses can be one's own, leased from other parties or in any other way that allows the utilization of these businesses. In accordance with international common practice (OECD Model Convention and the UN), to possess the qualifications as BUT, the place of business must have a degree of permanence both geographically (dimensional space) and continuous (time dimension). Business or activities, generally only executed or carried out continuously (without neglecting the technical problems that are temporary) but not (always) have to have a productive character because each part is a key element of all activities (totality) of each other the ropes and shoulder to shoulder to realize the company's goals.
To determine the existence of a PE/BUT based on this principle is to see whether or not assets owned or controlled by a foreign tax subjects. The definition of test assets in the treaty is as stipulated in Article 5 (2) UN Model, namely:
a. place of management,
b. subsidiary,
c. office building,
d. factory,
e. workshop,
f. mining and extraction of natural resources, and the drilling area (oil), and
g. fisheries, animal husbandry, agriculture, plantation and forestry.

Physical facilities BUT since employers began doing business or conducting activities in the business (not in existence when the facility is). Elimination place of business or termination of business and activities may terminate the existence of a Permanent Establishment.

b). Permanent Establishment "activity"
PE/BUT the existence of the activity associated with a "deemed" or "fiction" PE/BUT that does not seem any "fixed place of business" is used as a place or base for doing business or conducting activities permanently. Because it is "deemed", PE/BUT different facilities must comply with the provisions of the general definition, is always an event and automatically becomes PE/BUT. In these instances the Model 1992 and 1977 and the last in 1998 which can be categorized as PE/BUT activities are:
a. project construction, installation or assembly project,
b. provision of services for a certain period in the 12 (twelve) months.

In contrast to the activity of provision of services, PE/BUT the construction projects (building roads, bridges, buildings and so on) do not recognize time test. In accordance with the definition, each project construction, installation and assembly regardless of the duration will always be a PE/BUT. Inclusion of a time limit (the minimum test time) in determining the provision of services activities that can be PE/BUT appears to align with international practice. Thus, only the activity in Indonesia providing services that exceed the test time can be a PE/BUT.

c). Permanent Establishment "Agency"
Besides facility characterized by physical and activities, PE/BUT can exist because of business relations agency. With agency relationships, entrepreneurs can earn foreign taxpayers business from Indonesia without having to use fixed place of business or activity itself. PE/BUT agency called "agency-type" PE/BUT.
In accordance with common practice, there are independent and dependent agents while agents that can be PE/BUT only the second type. Can be an agent who is legally independent of type, but because economically, for example, serve only one or a group of companies or in business received detailed instructions from foreign taxpayers companies, for purposes of taxation is not considered independent.
Agency activities can be run by a private person or entity may be an independent body or association foreign taxpayers company. In the presence PE/BUT, for the purposes of tax administration, individuals and entities who becomes the agent has two identities (domestic taxpayers for himself and for foreign taxpayers PE/BUT). PE/BUT agency arises when the agency relationship and completed at the time of breakup is

d). Permanent Establishment "Insurance Companies"
Determining whether foreign taxpayers insurance companies in Indonesia have a PE/BUT is not only a place of business or agency, but it can also because acceptance or closure of the risk premium in Indonesia through the employee (or his agent). Thus, it seems that the acceptance or closure of the risk premium without employees or agents PE/BUT do not meet the criteria.
PE/BUT taxation in connection with, the provisions of Article 24 OECD Model treaty requires nondiscriminatory treatment between the PE/BUT (business carried on by foreign taxpayers) with a business carried on by domestic taxpayers. Article 2 paragraph (2) Income Tax Act generally states, foreign taxpayers is doing business or conducting activities in Indonesia through PE/BUT, the fulfillment of tax obligation equated with the fulfillment of tax obligations domestic taxpayers.

Accounting in Taxation Matters in Indonesia

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Accounting in Taxation Matters in Indonesia based on :
1. Article 1 number 26 Act 16/2000 jo. Act 16/2009
2. Article 28 number 26 Act 16/2000 jo. Act 16/2009
3. Article 4, 6, 9, 11, 11A and 17 Act 17/2000 jo. 36/2008
4. Decree of Ministry of Finance RI 533/KMK.04/2000
5. Decree of Ministry of Finance RI 543/KMK.04/2000
6. Decree of Ministry of Finance RI 545/KMK.04/2000

Accounting in Commercial Term is "recording, classifying, and summarizing economic events in logical manner to provide financial information for decision making “ . The accounting process is a series of activities that begins with a transaction and ends with the closing of the books. Closing of the books give rise financial information.

The Financial Information consists of:
1. Balance Sheet;
2. Comprehensive Income Statement;
3. Statement of Change of Owner’s Equity;
4. Statement of Cash Flows.

Accounting Principles
1.Basic Formula: Assets = Liabilities+Owner’s Equity
2.Double Entry Accounting : Debet and Credit
3.Balance Sheet and Income Statement Elements :
a. Assets (Debet)
b. Liabilities (Credit
c. Equity (Credit)
d. Income (Credit)
e. Expense (Debet)

Accounting in Taxation

Based on Article 1 number 26 Act towards KUP:
“recording in logical manner to gathering financial data and information involved; Assets, Liabilities, Capital, Income and Expense, and also Cost and Selling Price of good and service that closed with designing financial information such as Balance Sheet and Income Statement in each end of Fiscal Year “ .

And Based on Article 28 Act 16/2000 jo. Act 16/2009 towards KUP:
(1) Individual taxpayers undertaking business activities or independent jobs and taxable companies in Indonesia shall perform book keeping/accounting.
(2) Taxpayers exempted from performing the book keeping as meant in paragraph (1) but they are obliged to record shall be individual taxpayers undertaking business activities or independent work/jobs who according to provisions of taxation laws are permitted to calculated net income by using norms of calculation of net income and individual taxpayers who undertaken no business activities or independent work/jobs.
(3) The book keeping or recording shall be managed by observing good intention and
reflecting the real conditions or business activities.
(4) The book keeping or recording shall be managed in Indonesia by using Latin letters, Arabic letters, rupiah denomination and compiled in the Indonesian language or other foreign languages permitted by the Minister of Finance.
(5) The book keeping shall be managed by the principle of consistency and the accrual or cash system.
(6) Any change in models of book keeping and/or accounting year shall secure approval from the Director General of Taxation.
(7) The book keeping shall at least consist of records of assets, liabilities, capital, income and costs, as well as sales and purchase, so that amounts of tax due can be calculated.
(8) The book keeping in foreign languages and currencies other than the Rupiah can be
managed by taxpayers after securing licenses from the Minister of Finance.
(9) The recording as meant in paragraph (2) shall consist of data collected regularly on goods turnover or revenue and/or gross income as the basis for calculation of amounts of tax due, including income which is not a tax object and/or not subjected to final tax.
(10) Individual taxpayers not obliged to convey annual income tax return shall be exempted from the obligation to perform bookkeeping and recording.
(11) Books, records, documents which become the basis for book keeping or recording and other documents shall be maintained for 10 (ten) years in Indonesia, namely in business places or domiciles by individual taxpayers or domiciles by taxable companies.
(12) Models of and procedures for the recording as meant in paragraph (2) shall be regulated by a decision of the Director General of Taxation."

Comercial versus Fiscal Accounting

Comercial Accounting:

(1) Designed in term of PSAK (Generally Acceoted Accounting Principle) made by IAI
(2) Comprehensive Reporting for user (min. 5 (five) report)
(3) Profit projection and Financial Valuation

Fiscal Accounting:
(1) Designed in term of PSAK (Generally Accepted Accounting Principle) made by IAI and also
Tax Regulation (Act KUP, Act Income Tax, etc.)
(2) Focus in Balance Sheet and Income Statement
(3) To define what amount Tax Payable in Tax Return (SPT)

Fiscal Reconsiliation:
Article 6 Act 7/1983 jo. Act 36/2008 for Deductible Expenses
Article 9 Act 7/1983 jo. Act 36/2008 for Non - Deductible Expenses
Article 11 Act 7/1983 jo. Act 36/2008 for Fixed Assets Depreciation
Article 11A Act 7/1983 jo. Act 36/2008 for Intangible Assets Amortisation

Deductible Expenses
Article 6 Act 7/1983 jo. Act 36/2008

1. Expenses to earn, to collect and to secure income, including cost of materials, costs in connection with employment or services including wages, salaries, honoraria, bonuses, gratuities and remuneration in the form of money, interest, rents, royalties, travel expenses, waste processing expenses, insurance premiums, administrative expenses and taxes other than income tax;

2. Depreciation of tangible asset and amortization of rights and other expenditures which have useful life of more than 1 (one) year referred to in Article 11 and Article 11A;

3. Contributions to a pension fund approved by the Minister of Finance;

4. Losses incurred from the sale or transfer of properties owned and used in business or used for the purpose of earning, collecting and securing income;

5. Losses from foreign exchange;

6. Costs related to research and development carried out in Indonesia;

7. Scholarships, apprenticeships and training expenses;

8. Debts which are actually uncollectible, provided that:
a. it has been charged to commercial financial statement;
b. the case has been filed to court or BUPLN or there is a written agreement on the
discharge of indebtedness between debtor and creditor;
c. it has been published in media; and
d. the Taxpayer shall submit the list of bad debt to the Directorate General of Taxes, the procedure of which shall be stipulated further by the Director General of Taxes Decree.

Non Deductible Expenses
Article 9 Act 7/1983 jo. Act 36/2008

1. Distribution of profit in whatever name or form, such as dividends, including dividends paid by an insurance company to policyholders, and any distribution of the surplus by a cooperative;

2. Expenses charged or incurred for the personal benefit of shareholders, partners or
members;

3. Formation or accumulation of reserves, except for reserve for bad debt of a bank or a finance lease, reserves in an insurance business, and reserves for reclamation costs in general mining, the terms and conditions of which shall be stipulated by the Minister of Finance Decree;

4. Insurance premiums for health, accident, life, dual purpose, and education insurance which are paid by an individual Taxpayer, except those paid by an employer where premiums are treated as income of the Taxpayer;

5. Consideration or remuneration related to employment or services given in the form of a benefit in kind, except provision of food and beverages for employees or consideration or remuneration given in the form of a benefit in kind in certain regions and in connection with employment as stipulated by the Minister of Finance Decree;

6. Excessive compensation paid to shareholders or other associated parties as a
consideration for work performed;

7. Gifts, aid or donations, and inheritances referred to in Article 4 paragraph (3)
subparagraph a and subparagraph b, except zakat on income actually paid by a Moslem
individual Taxpayer and or a resident Taxpayer other than individual owned by a Moslem to an amil zakat board or other amil zakat institutions established or approved by the government;

8. Income tax;

9. Costs incurred for the personal benefit of a Taxpayer or his dependents;

10. Salaries paid to a member of an association, firma, or limited partnership the capital of which does not consist of stocks;

11. Administrative penalties in the form of interest, fines, and surcharges, as well as criminal penalties in the form of fines imposed pursuant to the tax laws.

Fixed Assets Depreciation
Article 11 Act 7/1983 jo. Act 36/2008
1. Depreciation with respect to cost of purchasing, erecting, expanding, improving, or replacing tangible assets, except land that bears ownership right, a right to build, a right to cultivate, and a right to use that is held for earning, collecting, and securing of income that has a useful life of more than one year, shall be calculated on a straight line basis over the useful life stipulated for the assets.

2. Depreciation with respect to tangible assets referred to in paragraph (1), other than building, may also be calculated under the declining balance method over the useful life of the asset by applying the rate of depreciation to the book value, and at the end of the useful life the remaining of the book value shall be fully depreciated, provided that the method is adopted consistently.

3. Depreciation shall commence in the month expenditures are incurred; except for the asset still in progress, the depreciation shall commence in the month when the process is completed.

4. Subject to the approval of the Director General of Taxes, a Taxpayer may start to claim depreciation at the beginning of the month the asset is used to earn, to collect and to secure income or of the month the asset produces income.

5. If a Taxpayer revalues the asset referred to in Article 19, then the basis of depreciation for the asset shall be the value resulting from the revaluation.

Intangible Assets Amortisation
Article 11A Act 7/1983 jo. Act 36/2008

Amortization with respect to cost of acquiring intangible asset and other costs including cost of extending right to build, right to cultivates, and right to use that has a useful life of more than one year which is used to earn, to collect and to secure income shall be calculated under straight line method or declining balance method by applying the amortization rate to the costs or the book value and at the end of the useful life the remaining of the book value shall be fully amortized provided that the method is adopted consistently.

Formal Aspects Of Tax Planning (Case Study in Indonesia)

2009-10-01T11:16:00.000+08:00

Formal aspects of tax planning focused on aspects of taxation that are administrative, in which the purpose of handling the administrative aspects of this will facilitate taxpayers in dealing with the tax inspection includes examining the documents by the tax itself.

A. SCOPE OF EXAMINATION AND EXAMINATION

Before we discuss the things what should be done in the formal aspects of tax planning is a good idea to first describe ¬ type-type of tax inspection and investigation scope

A.1. Tax Inspection

Type of examination consists of:
1. Routine inspection, which checks that are routinely made to the Taxpayer in connection with the fulfillment of rights and tax obligations.
2. Inspection Selection Criteria, the examination conducted on selected taxpayers based on risk scores computerized compliance.
3. Special Examination, the examination conducted on the Taxpayer with respect to any information, data, reports or complaints related to it and to obtain information or data for a particular purpose.
4. Location Taxpayer examination, the examination of the branches, representatives, and factory or place of business of the taxpayer Domicile.
5. Examination Year Walk, the examination of taxpayer who performed in the current year for several types of specific tax or all types of taxes and / or to collect data and or information for a particular purpose.
6. Evidence examination beginning, the tests done to obtain preliminary evidence about the alleged criminal act has occurred in the field of taxation.
7. Integrated inspection, which is coordinated examination of two or more units of the examination of some taxpayers who have a relationship of ownership, control, management, business and / or financially.
8. Examination for Tax Billing Goals (Delinquency Audit), the examination conducted to obtain data on taxpayer assets / Person who is the object of tax in relation to confiscation of tax arrears in accordance with the Billing Act Coercion Letter.

A.2. Inspection Scope

The scope of the examination consists of:
1. Field inspection conducted at the taxpayer for one, several or all types of taxes, for the current year or year and the year before ¬.
Field inspection can be divided into:
a) Inspection Completed (PL) is a field examination conducted on the Tax Payer, including joint operations and the consortium, for all types of taxes, for the current year or year and a year earlier, which carried out by applying techniques commonly used tests in order inspection goals;
b) The Simple Golf (PSL) is a field examination conducted on the Tax Payer to one, several or all types of taxes are coordinated between the Head Office Section, in the current year or previous years, which carried out by applying inspection techniques deemed necessary under the circumstances in order to achieve objectives inspection.
2. Examination Office of the tests done in KPP or KP2KP (certain). Directorate General of Taxes on one or in a coordinated tax several types inter-section by the Head Office, in the current year or previous years. Examination Office can only be done with simple Examination Office (PSK).
In the face of a tax examination, we need to understand the type and scope of the examination, it is of course related to the degree of seriousness of the inspection and support data and information in connection with the examination. Therefore, the support and availability of data becomes very important thing in dealing with the tax inspection. The more tidy and good handling of data, starting from kerapihan transaction handling, classification, accounting to data storage, will be very helpful to us in dealing with the auditor.
It should be noted that when tax examiners do not have enough data support and adequate tend to act not bothered, by charging the various taxes we pay based on the assumption that their own officers. When this happens, not only do we get a loss, but also the hassle to argue with "findings" of the tax officers, even if what is written from the results of the investigation, sometimes extremely "funny" and illogical. However, if we do good planning in terms of formal aspects then it unpleasant things in the examination we can avoid or at least could have minimal.
Some things to note in conducting formal aspects of tax planning are:
1. Being WP Compliance
Several criteria Taxpayer (WP) Compliance based on the Decree of the Minister of Finance No. 235/KMK.03/2003 is
a. in a timely submit an annual;
b. in the last year, delivering a late SPT period not more than 3 (three) times the tax for each type of tax and succession not participate;
c. not have tax arrears for all types of taxes:
d. never convicted of a crime in the field of taxation within a period of 10 (ten) years.
e. in terms of the financial statements audited by public accountants or the Board of Finance and Development Supervision must be with the unqualified opinion or the reasonable opinion with the exception of all exceptions it does not affect the fiscal income.
Compliance with the WP, the company will have the facility Preliminary Excess Returns of Income Tax at least 3 (three) months from receipt of the applications and for VAT no later than 1 (one) month from receipt of the applications.

2. Classification Acccount
Financial transactions that occurred from a very diverse business activities, a common way to simplify the transaction is to classify the transaction is then recorded in the financial statements. This classification process in the formal tax planning is very important, because the tax is a transaction or transaction types that have different tax consequences. It is important to understand, because our tax system than the system adopted self-assessment, as well subscribe to the system Withholding System, which is a particular taxpayer is given the right to conduct polls or cuts to other parties for certain transactions and report it pernungutan cutting and periodically to the Tax Office , through the mechanism of the Notice Period and the Annual.

As an example of the importance of classification in financial transactions:
Mengeiuarkan companies to buy oil costs for the vehicle engine operation has been operating for a certain time. The purchase of oil mentioned above, if our classification biayakan with the vehicle maintenance costs for this transaction the Company shall make deductions for the purchase of oil at 6%. This is in accordance with the provisions stipulated in the KEP-170/PJ/2002 decision within one point says: On Services care/ maintenance /repair transport vehicle, the service recipient must withhold at a rate of 6% of gross income.
Whereas the purchase of oil if we classify as the approximate cost of engine oil is not included in the definition referred to in the above decision, because it is the purchase of goods.

Tax inspectors, are usually not bothered in the tax inspection by looking for material truth. Coroner taxes formalities usually more forward than what we serve. Inspection techniques to promote aspects of formality of the figures that we present a technique known as conformasi. Examination techniques in this way is most easily done from a variety of inspection techniques, though, and this way ignores the truth of the estimated material / transaction.

Because this technique relies on the formal truth then we can deal with the formal notice of the truth of the company's financial estimates. This can be done by making a classification in accordance with the provisions of estimates or the term adopted by taxation, for example engineering and management services are distinguished by classifications consulting services. Although there are similarities both terms and transactions can be combined in one term, but different tax consequences.

In accordance with the provisions KEP-170/PJ/2002, consulting services 7.5% tariff imposed but technical and management services fee charged 6% of gross income. Because of differences in these rates there is a transaction that should be classified into the estimates' different. Thus, we formally have done bookkeeping in accordance with the terms and understanding of taxation. This will help us in evaluating whether the company has to meet his tax obligations in accordance with existing regulations.

For example, the company recorded a consultant cost estimates of Rp 1 billion in 2003, to ensure that we have to meet the provisions of the Income tax cuts of this Article 23, we can see the total SPT Masa PPh Article 23, there were some USD 75 million (7.5% X USD 1 billion). Or the opposite way when we have a deduction for the cost of consultants for Rp. 75 million, whether company estimated cost cutting own Rp 1 billion?. If not, then it is likely the tax examination, we will have a positive correction to the obligation of article 23 income tax cuts are.

3. Choosing the right moment and Report Pay Taxes
Payment / deposit and reporting of SPT Annual Period and that have the latest period.
So that the tax payments would be better the effect on cash flow if it is done before the end of the time-payment-related tax. Funds within a period that there can be used for short-term capital or remain stored in the Bank.
But do not get the deposit made after the maximum period, because the interest rate currently is less than the amount of delay penalty 2% per month. Strategy opposite could happen in the opposite conditions, as has been experienced in the years 1997-1998, in which interest rates which reached 4% per month, higher than the value of the delay penalties.

Fact!
Crisis conditions in 1999 caused the company to trick situations in order to survive. One of the financing strategy is done by delaying tax payments, with consequences penalized 2% per month. Why?
Because the interest rate at the time it reached 4% per month, so the company had a profit of 2% per month late payment of tax, which penalized only 2% interest per month.
But what is clear is there must be efforts to optimize the time value of money in the form of avoidance of waste of corporate resources to pay the tax penalties and other opportunity costs.
Because there is no opportunity cost for determining when to report, the company should report the tax as soon as possible after the payment of taxes without waiting ahead of a time-out.

4. Data Storage
Management in running the company generally oriented to the future, namely to trigger the company's vision and mission. This spark is a beautiful dream that will deliver the company to the real ita a beautiful future.

However, please be aware that the tax is one important thing to deliver on the company that we created conditions, only the tax issue is generally related to the past. For example, the tax examination the tax officials do, regardless of type and scope checking is always associated with the past.
Therefore, even if the tax planning we do for the company in the future, aspects of data storage becomes an important thing to note. Good storage and neatly arranged we will make it easier to prove that the tax obligation on the company attached both formal and material have been done carefully.

Documentation, with reference to the provisions of the law on General Provisions and Tax Procedures, Law No. 16 of 2000, chapter 28 verse 11 states: The books, records, documents on which the books or records and Other documents must be retained for 10 (ten) years in Indonesia, namely in the activities or in a residence for an individual taxpayer, or where the position of the taxpayer entity.

Given the length of time the document storage, document storage will also have to consider the durability of documents in storage.
Example:
Company stood on January 20, 2003, all documents relating to financial transactions that could have implications for aspects of taxation, will expire in 2013. Therefore, neatness, cleanliness, and regulation of temperature and humidity data storage space becomes an important requirement to avoid the difficulties we are doing proof of our tax problems in the future.