The Elimination of Tax Administrative Sanctions

2015 begins with good news for the taxpayers when the Government of Republic Indonesia issued the Minister of Finance Regulation No. 29/PMK.03/2015 on the Elimination of Tax Administrative Sanctions in the form of interest-based on the Article 19 Paragraph (1) of Law No.6 of 1983 on General Provisions and Tax Procedures (KUP).

The Minister of Finance is providing the said Elimination of Tax Administrative Sanctions in encouraging taxpayers to pay their tax debts immediately. Prior to this, tax debt due and remains unpaid after the deadline will attract a 2% penalty on the amount of tax payable.

In order to enjoy the Elimination of Tax Administrative Sanctions, the taxpayer is required to:

1. Pay off tax debts incurred prior to January 1, 2015; and repayment is done prior to January 1, 2016.
2. Submit a written request written in Indonesian to the Director-General of Taxes.
3. 1 (one) application only for 1 (one) Tax Collection Letter; except when the Tax Assessment Letter, the Letter of Correction Decision, the Objection Decision, the Appeal Verdict or Reconsideration Decision was issued more than 1 (one) Tax Collection Letter (“STP”), then 1 (one) application letter may be submitted to more than 1 (one) STPs.
4. Tax Payment Slip of tax payable should be enclosed with the Application Letter.
5. The Application Letter is submitted to the Tax Office where the taxpayer is registered.
6. The Application Letter must be signed by the taxpayer; in cases which Application Letter is not signed by the taxpayer, the Application Form must enclose a Special Power of Attorney referred to in Article 32 paragraph (3) of the KUP Law.
7. The Application Letter may be filed not more than two (2) times. The second Application Letter should be submitted no later than 3 months from the date of the decision of the Director-General of Taxes on the first letter of application.

Sunset Policy

According to the Director-General of Taxation, the tax revenue collection at the end of March 2015 is Rp 170 trillion, i.e. only 10 percent of tax revenue target of Rp 1,489.3 trillion set out in the 2015 revised budget.

In view of the above, the Government of Republic Indonesia has re-introduced the Sunset Policy which provides the Elimination of Tax Administrative Sanctions in the form of interest under Article 37A of Law No.28 of 2007 on KUP for taxes not reported.

This Elimination of Tax Administrative Sanctions allows greater opportunities for the public to begin fulfilling tax obligations voluntarily and in accordance with the tax laws. Both personal taxpayers and corporate taxpayers who may not be reporting their taxes for years can start complying with the tax law or amending their annual income tax return beginning from 1 April 2015.

Conclusion

The Government of Republic Indonesia expects its tax collection to increase in line with the above Elimination of Tax Administrative Sanctions.