Jakarta, CNBC Indonesia – Chairperson of the Indonesian Entrepreneurs Association Daily Chairman Hariyadi Sukamdani revealed in the tax sector omnibus, there is no Law Number 42 of 2009 concerning the Third Amendment to Law Number 8 of 1983 concerning Value Added Tax on Goods and Services and Sales Tax on Goods Fancy and Law Number 14 of 2002 concerning Tax Courts.
“It seems that in the tax omnibus law, related to the VAT Law and Tax Court, it is not included in the omnibus law,” said Hariyadi in a Public Hearing Meeting with the Budget Board of the Republic of Indonesia House of Representatives in the Meeting Room of the Indonesian Parliament Banggar, Senayan Parliament Complex, Monday (2/3/2020).
Therefore, according to him, if the tax sector omnibus has been submitted by the government and discussed by the Indonesian Parliament, both aspects must be improved. Especially in terms of regulation.
“So, for example, with the tax court issue […] they assume that the role of the Ministry of Finance should not be in administration development, to maintain the independence of the tax court,” Hariyadi said.
He also encouraged the tax ratio to increase tax by implementing the online tax system as a whole. According to Hariyadi, the online system is integrated with aligning administrative documents that can be done thoroughly. In addition, he also hopes that the government can carefully apply fair taxes in online and social media transactions.
“Our notes, online transactions and social media, are quite large. We’ve talked intensively with the DGT [Directorate General of Tax Ministry of Finance] concerning who can capture the potential tax from online,” said Hariyadi. “Ads on Google are rather difficult to capture, but we are looking for a way,” he continued.
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Points Discussed in the Taxation Omnibus Law
Earlier, Finance Minister Sri Mulyani Indrawati said the tax omnibus law would unite a number of regulations. Starting from the Act (Act) of Income Tax (PPh), VAT, General Provisions and Procedures for Taxation, to local taxes and local user fees.
1. Corporate Income Tax Rates to Dividend Tax
Some of the points include, the government agreed to reduce the maximum Corporate Income Tax tariff to 20% from the previous 25%. This will be done in stages starting 2021-2023.
Then, the government will also reduce the Corporate Pph tariff for companies that go public by a maximum of 17% from the previous 22%.
Not only that, the government also exempts domestic dividend income tax rates, both for individual and corporate taxpayers. In fact, Article 26 PPh rates on interest for PPh will also be reduced from the current 20%.
2. Taxation Regime
In terms of the taxation regime, the government will regulate the territorial system for income derived from abroad. Taxpayers who have income from abroad will not be subject to dividend tax.
Omnibus law taxation will also change the mandatory status of a person, both Indonesian citizens and foreign nationals, depending on how long they stay in Indonesian territory or abroad.
3. Tax Credit Rates
The Omnibus law will regulate the right to credit input taxes, especially for Taxable Entrepreneurs (PKP) who obtain goods or services. If all this time they have not been able to credit, it will later be arranged that they can credit a maximum input tax of 80%.
4. Administrative Sanctions
The draft omnibus law will also ease sanctions, if the taxpayer corrects the Annual Notification Letter (SPT) and experiences underpayment, then it will be subject to a sanction of 2% per month.
Within a period of 24 months, the sanction is considered burdensome for taxpayers because the penalty to be paid can reach 48%. But in the omnibus law, sanctions per month will be reduced pro rata based on the benchmark interest rate in the market.
5. Digital Company Tax Rates
The Omnibus law will regulate in detail the rules for taxing digital companies that do not have branch offices in Indonesia, but reap the benefits of doing business in Indonesia. That is, they clearly have tax obligations that must be paid to the government.
For example, like Google, to Netflix. The Omnibus law will regulate how digital companies can still pay their tax obligations, without changing the existing provisions. One of them, by depositing VAT.
6. Local Taxes
The Omnibus law will regulate the rationalization of regional taxes which later aims to rearrange the authority of the central government in setting regional taxes nationally.