SSJKlopedia - Application for Reduction/Cancellation of Administrative Sanction
The taxpayer may submit an Application to the Tax Office for the reduction/cancellation of administrative sanction. The Tax Office may fully accept, partially accept or reject the taxpayer's application. The Tax Office must process and issue the decision within 6 months since the application is submitted by the taxpayer. If the Tax Office reject the application, the taxpayer can still re-submit the application for max 1 time.
SSJKlopedia - How to Calculate the Income Tax Art. 21 if the Employee Resigns
If the employee resigns in the midyear, the employer should recalculate the Income Tax Art. 21 based on the accumulated income of the employee during the working period in that particular year. The employer should provide the withholding tax slip (1721-A1 Form) to the employee and refund the tax overpayment (if any).
Tax Update - NEW Transfer Pricing Rules - February 2024
After the Harmonization of Tax Law was issued in last 2021, finally the awaited implementing regulation regarding Transfer Pricing (“TP”) has been released by the Ministry of Finance (MoF) on last 29 December 2023. The taxpayer conducting the transactions influenced by special relationship starting from FY2024 should emphasize on some important transformations in this PMK-172 which impacts among others on some of below matters:
- The taxpayer needs to identify its transaction influenced by special relationship since the determination of this transaction in PMK-172 is not only comprised of related party transaction.
- The application of Arm’s Length Principle also has some additional criteria in term of the requirement of preliminary stage analysis to certain transactions, the geographical comparability, and the single-year comparable data for the benchmarking purpose.
- The secondary adjustment and VAT implication during the tax audit are also modified in this PMK-172 that need extra attention.
This new regulation revokes several MoF Regulations issued in 2016-2020 regarding TP Documentation, Mutual Agreement Procedure (“MAP”), and Advance Pricing Agreement (“APA”). It seems PMK-172 is structured to be a “one-stop guideline”.
Tax Update - NEW Rates of Income Tax Art. 21 - January 2024
On 27 December 2023, the Indonesian Government has issued a Regulation No. 58 year 2023 regarding the Rates of Income Tax Art. 21 on the Income related to the Employment, Service or Activities of Individual Taxpayer. This Regulation is applicable starting 1 January 2024.
The purpose of this Regulation is to simplify the Monthly Income Tax Art. 21 calculations by applying 1 (one) effective tax rate (TER) on the Gross Income of the Individual Taxpayer.
For the annual tax calculation, the Individual Income Tax should be recalculated by applying the Art. 17 of Income Tax Law.
Furthermore, the Ministry of Finance has also issued a Regulation No. 168 Year 2023 for the implementation of Government Regulation No. 8 Year 2023.
SSJKlopedia - Preliminary VAT Refund - December 2023
The Taxpayer who has VAT Overpayment may claim the Preliminary VAT Refund, and the Tax Office will process the Preliminary VAT Refund within 1 month.
Although the Taxpayer has received the VAT Refund, the Tax Office may still conduct tax audit. If during tax audit the Tax Office impose VAT underpayment, and the Taxpayer qualifies as Low Risk VAT Entrepreneur ("PKP Risiko Rendah"), the penalty will be maximum 24 months instead of 100%.
SSJKlopedia - Preparation Master File and Local File - November 2023
According to the Ministry of Finance Regulation (MoF) No. 213/PMK.03/2016, if the Indonesian taxpayer has related party transactions, there is a possibility to prepare Master File and Local File to ensure the related party transactions are arm's length.
The above obligation should be fulfilled if the taxpayer meet certain threshold to prepare the Master File and Local File.
For easy reference, we attach the simple guidance whether the taxpayer has obligation to prepare Master File and Local File.
Tax Update November 2023
According to the Directorate General of Tax Regulation No. PER-29/PJ/2017, the constituent entity (Parent Entity or entity member) or taxpayer that has affiliated transactions are required to submit the Country by Country Report (CbCR) Notification. The CbCR Notification consists of domestic taxpayer information and the statement whether the domestic taxpayer is required to submit CbCR or not.
For the taxpayer with fiscal year January - December, the deadline for submission of CbCR Notification FY2022 is 31 December 2023.
The CbCR Notification should be reported to the DGT by using online system (e-filling), and the DGT will provide the electronic receipt as the prove of submission of CbCR Notification. This electronic receipt should be attached in the Corporate Income Tax Return FY2023 which should be submitted at the end of April 2024 at the latest.
In case the CbCR Notification is not reported and/or attached in the Corporate Income Tax Return, the Tax Office may classify the Corporate Income Tax Return is not completed and reported to the Tax Office.
Tax Update September 2023
SSJK Consulting has recently released a guideline that outlines the Practical Application of Avoidance of Double Taxation for Interest, Dividend, and Royalty. This guideline serves as a valuable resource for companies dealing with international tax matters.
The guideline explains the concept of WHT Art. 26 on cross border transactions involving interest, dividend, and royalty. It also includes information on the DGT Form requirements that must be met in order to utilize the Tax Treaty benefit.
Tax Update August 2023
The August 2023 Tax Update informs PMK 72 year 2023 regarding Income Tax treatment on Depreciation of Tangible Assets and/or Amortization of Intangible Assets.
Tax Guide - Timeline for Tax Disputes Resolution
We are pleased to share a practical guide for navigating the timeline of tax disputes resolution in Indonesia, which include:
- Tax Audit
- Tax Objection
- Tax Appeal and
- Civil Review
We hope this guide will make the process smoother for taxpayers facing tax disputes