What’s in this article
People all over the world travel to Indonesia for numerous reasons, some come to relax in the sunny shores of Bali, and some visit for business opportunities in Jakarta, the capital and financial centre of Indonesia.
This results in her popularity amongst travellers and thus attractive for both individuals to migrate and businesses to expand in Indonesia. Just like any other country in the world, Indonesia has taxation rules and regulations that are mandatory to abide by for both individuals and corporations.
The world battles against tax crimes, Indonesia is doing the same and has since implemented laws to combat such activities. Moreover, here we’ll discuss the tax crimes in Indonesia.
What are the Common Tax Crimes in Indonesia?
Tax crimes in Indonesia are when tax laws that have been implemented are violated. Tax crimes include but are not limited to:
- Failure to report a business to be registered as a taxable entrepreneur
- Failure to submit documents such as
- Annual Tax Return (Surat Pemberitahuan – SPT)
- Official Documents required
- Failure to make payments for mandatory taxes
- Incomplete, falsified, or inaccurate information given to tax authorities
- Misuse or unauthorised user of taxable entrepreneur
- Failure or refusal to fulfil tax obligations
Laws that Govern Taxation in Indonesia
Hence, Indonesian taxation laws are primarily based on Article 23A of the 1945 Indonesian Constitution. Also, Article 23A states that tax is an enforceable contribution to be imposed on all Indonesian citizens, foreign nationals, and tax residents.
Therefore, a foreigner can become an income tax resident as it is defined as someone who has been residing in Indonesia for about 183 cumulative days within 12 months or someone present in Indonesia to reside in Indonesia.
As a result, the income source in Indonesia is a tax at a progressive rate of 5% to 30% depending on the sum of income. This applies to residents and tax residents of Indonesia only. As for non-tax residents, foreigners working in Indonesia for less than 183 days will have their income subjected to a standard rate of 20% tax.
It is advised to research tax exemptions as there are exemptions applicable for both individuals and companies alike that may lessen the tax burden.
The common tax laws that should be noted are:
- Income Tax Law (“Undang-undang Pajak Penghasilan/UU PPh”: Law Number 7 of 1983, amended by Law No. 17/2000; amended by law No 36/2008
- Value Added Tax VAT termed ‘Goods and Services and Sales Tax on Luxury Goods’ (“Undang-undang Pajak Pertambahan Nilai atas Barang dan Jasa dan Pajak Penjualan atas Barang Mewah”/UU PPN and PPn BM ): Law No. 8/1983, amended I by Law No. 11/2000, amended II by Law No. 18/2004, Last amended by Law No. 42/2009
- Tax Court Law (“Undang-undang Pengadilan Pajak/UU PP”): Law No. 14/2002
- Stamp Duty (“Undang-undang Bea Meterai/UU BM”) also known as Law Number 13 of 1985
- Local Tax and User Charges Law (“Undang-undang Pajak Daerah dan retribusi Daerah”) also known as Law Number 28 of 2009
However, in the case any indication of criminal activity is recognised, the case will be decided by the district court if any criminal proceedings are required to be performed.
Although, some tax-related objections that are brought before the administrative court are:
- Asset’s revaluation,
- Objections to a merger’s having been filed with a book value,
- Objections to registration as a taxable entrepreneur, and
- Objections to the regulations or policies of the tax office or the Directorate General of Tax.
Punishments Imposed on Various Tax Crimes Committed in Indonesia
For instance, an individual, local or foreign, commits a tax crime in Indonesia if they violate any of the tax laws or regulations. Above all, for those who commit a tax crime in Indonesia, punishments will be from the government. Below are some scenarios and consequences for committing a tax crime.
Misusing NPWP/PKP or submitting incorrect SPT for unlawful tax credits incurs severe penalties:
- Imprisonment for a term lasting anywhere between six months and two years.
- Fine, the amount of money totalling between two and four times the amount of excess money which had been claimed.
Other tax offences which have been committed in Indonesia will cause the guilty party to be subjected to:
- Risk of imprisonment for anywhere between six months and six years.
- Fined an amount of money totalling between two and four times the amount of tax payable.
If a taxpayer commits a criminal tax offence, punishments can double, and imprisonment starts after any previous term ends.
FAQs
Yes, work permit holders are eligible to apply for dependent visas for their spouse and children if they wish to live in Indonesia with you.
Indonesia has the biggest economy in South East Asia, this means that there is potential in the economic growth. Thus, Indonesia has a wide range of goods and services along with better standards of living.
In the city of Jakarta and Bali, there is a large expat community as it is popular amongst tourists and travellers alike.
The laws governing taxation, tax evasion, and avoidance are very strict in Indonesia. The Indonesian government deliberately chose to make the country’s tax laws strict in order to dissuade potential offenders from committing any tax crimes.
The Indonesian government has been very serious about reducing the tax crime rate. It continues to modify the tax laws of the country in order to prevent people from committing tax crimes as well as to more severely punish tax offenders. The Indonesian authorities have also increased the intensity of law enforcement with regard to tax crimes.
