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Indonesia Tax Crimes

5 min read|Last Updated: August 29, 2022|
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People all over the world come 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 and set up 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.

As the world battles on against tax crimes, Indonesia is doing the same and has since implemented laws to combat such activities.

What are the Common Tax Crimes in Indonesia?

Tax crimes are when tax laws that has been implemented is 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

Indonesian taxation laws are primarily based on Article 23A of the 1945 Indonesian Constitution. Article 23A states that tax is an enforceable contribution to be imposed on all Indonesian citizens, foreign nationals, and tax residents.

A foreigner can become a tax resident as it is defined as someone who has been residing in Indonesia for 183 cumulative days within a 12-month period or someone who is present in Indonesia with the intention of residing in Indonesia.

Income sourced in Indonesia is taxes at a progressive rate of 5% to 30% depending on the sum of income. This is applicable for 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 on tax exemptions as there are exemptions applicable for both individuals and companies alike that may lessen the tax burden tremendously and allow you to dedicate to other areas.

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

In the case of 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.

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

An individual, local or foreign, that has violated any of the tax laws or regulations will be subjected to punishments that has been implemented by the government.

In the case that an individual is guilty of misusing or an unauthorised use of an NPWP or PKP, or committing the offence of submitting a SPT with incorrect or incomplete information in order to receive excess money from the tax authorities in the form of unlawful tax compensation tax credit can be subjected to the penalty of:

  • 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 offenses 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 has committed a criminal tax offense during the past year, the punishments may be increased to up to two times the original amounts and any term of imprisonment imposed is to be calculated from the time the offender completed the initial prison term if one had been imposed for the previous offense.

The Indonesia tax compliances and regulations can be complicated.

That’s why we’re here to help you with your corporate needs from taxation, incorporation, auditing, and more – reach out to us today for a free consultation!

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FAQs

If I have a work permit in Indonesia, can I bring my family to Indonesia?2022-05-25T13:34:25+08:00

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.

Is Indonesia a good place to work or live in?2021-11-08T14:46:08+08:00

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.

How strict are Indonesia’s tax laws when compared to those of other countries?2021-11-08T14:45:30+08:00

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.

How has the Indonesian Government attempted to reduce the tax crime rate?2021-11-08T14:44:57+08:00

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.

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