Tax Amnesty – Assistance
October 10, 2016Tax Amnesty – What Next?
We are now into the second phase of the tax amnesty. Ultimately the first phase was successful with a rush of submissions in the final weeks. Many taxpayers may have missed out, unable to arrange their documentation or calculations in time. Many SMEs may still be considering applications as they are not subject to the same time pressures as individuals or larger corporates. Others, specifically corporates, may wish to consider the impact of a ‘clean’ tax record on the allocation of resources going forward, or perhaps the impact on the value of the company in the context of a corporate sale or takeover. We recommended that ALL taxpayers take note of the increased global and local focus on tax matters.
| WHAT SHOULD YOU DO?….. THE THREE STEP PROCESS | ||
| STEP 1 | STEP 2 | STEP 3 |
| Consider your asset portfolio and the level of compliance in previous declarations | Consider how bust to rectify and past discrepancies and apply for the amnesty, or take alternative action | Consider future declarations and how to plan for the tax impact in the coming years |
| A full and frank assessment of your wealth and overall tax position is an essential starting point. | What income, if any, has been under-declared and what will it cost to receive a “clean bill of health”? | What taxes will apply on future income streams and what alternative courses of action or reallocations may reduce the burden? |
| It is also essential that you understand your obligations as an Indonesian tax resident. Your personal/corporate circumstances will impact these. | What income, if any, has been under-declared and what will it cost to receive a “clean bill of health”? | Taking action now will impact the future – it is important to understand and take control to ensure tax costs are factored in to planning |
| HOW CAN WE ASSIST? | ||
| We can help in: matching assets to previous declarations; explaining the potential impact of any discrepancies in reporting and the attached risks; and the options available | We can advise on the implications of each option available, the risks involved and the recommended way forward | We can inform on the overall tax impact of current and future holding structures and portfolios, including analysis of alternatives and interaction with offshore tax regimes |
We offer competitive rates and personal, confidential service for the above. Fee structures are flexible and can include ‘success’ fees, based on a percentage of reduction in overall tax burden, where appropriate. In addition, where you are satisfied with our service, we hope that you will recommend us to others – introduction fees can more than offset your costs.
In brief, the Indonesian tax amnesty (Law No.11/2016) seeks to encourage the disclosure of previously undeclared assets* and the return of funds to the country whilst broadening the tax based and increasing the level of tax compliance. The incentive on offer is clearance for all years prior to 2015 (no further questions will be asked) in return for disclosure and payment of a ‘redemption fee’ on undeclared assets. The fee stars at 3% for payment and submission before 31 December 2016 and rises to 5% between 1 January and 31 March 2017. The percentages are doubled in relation to assets held overseas.
* the focus is on assets on the basis that assets are purchased from income and in may cases that income has not been subject to tax. Many taxpayers are facing the prospect of paying fees on assets purchased from income which has already been taxed and are therefore seeking alternatives to minimize costs.
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