The Finance Ministry's directorate general of taxes strongly advises taxpayers to visit any of its offices in Indonesia for information and a step-by-step guide to completing the asset declaration.

A Tax Amnesty Walkthrough

BY :TABITA DIELA

AUGUST 22, 2016

Jakarta. The tax amnesty program has run for more than a month now after a slow start. As of Monday (22/08), the tax office only managed to attract a tiny amount, 0.15 percent of the target to be exact, of assets repatriated from abroad.

President Joko "Jokowi" Widodo and the Ministry of Finance officials have been touring the archipelago for days to promote the program, trying to boost awareness and increase participation. Several other teams also promoted the program in Singapore, London and Hong Kong, where most wealthy Indonesians keep their offshore assets.

However, for many taxpayers the questions remain on the practical side of the subject. So here are several basic things to know on how to apply for the program.

The Finance Ministry's directorate general of taxes strongly advises taxpayers to visit any of its offices in Indonesia for information and a step-by-step guide to completing the asset declaration.

"Since Aug. 14, tax offices across Indonesia offered tax amnesty-related services every Sundays due to the rising demand," said Hestu Yoga Saksama, director of counseling, service and public relations at the Indonesian Tax Office.

Tax offices, which usually open from 8.00 a.m. to 4 p.m. on Mondays to Fridays, are now also open on Saturdays (until 2 p.m.) and Sundays (until 12.00 p.m.).

There are 13 forms available for download on the tax amnesty program's official website, so a help from an officer will make the process less complicated.

It seems like a lot of paperwork to complete. How long is it going to take to complete the process, including the waiting time in the queue?

Taxpayers must hand the forms in by themselves, but anyone can require information from the tax office's help desk. For those who have limited time to spend, it is best to ask someone else to gather tax amnesty-related information first and go to the tax office only when the forms are complete. The process in the tax office should be fast, because the officers will only check the forms have been completed correctly and they will not audit the details. What you report is what you pay, Hestu said.

So what exactly I must report?

Any assets taxpayers owned before 2015 and have yet to report in any previous tax reports should be included in the tax amnesty program. The calculation is extremely easy. Look at the list of assets in the tax report in 2015, and then check out the real assets that you owned as of Dec. 31. Those that are not included in the tax report are subject to tax amnesty, Hestu said.

Taxpayers must establish fair value of their properties, cars, appliances and other non-cash assets first to be reported under the tax amnesty program.

That shining new Mercedes you just bought last month does not need to be reported under the tax amnesty.

What if I cannot personally visit the tax office?

An amnesty proposal letter must be signed by the taxpayer, but it can be delivered to the tax office by another person — not by mail — as long as the person carries the power of attorney authorization signed by the taxpayer.

What if I do not have a tax registration number, or it had been annulled or suspended?

The tax official must register any taxpayer who does not have a tax registration number or reactivate those that are suspended on site. The taxpayer does not have a choice but to show up personally at the tax office.

What about taxpayers who currently reside outside Indonesia?

Those taxpayers can personally return their application letters and other documents physically to the tax office where they registered or to the Indonesian embassies in Singapore, London and Hong Kong.

The tax office provides abundant information on its website at www.pajak.go.id/amnestipajak — which includes terminologies, timeframes, tax rates, regulations, forms and even a list of frequently asked questions — that is accessible at any time.

Queries can be made telephonically during working hours at KringPajak 1500200, Tax Amnesty Service 1500745, Twitter @DitjenPajakRI, Facebook DitjenPajakRI and even the YouTube channel DitjenPajakRI.

The Directorate General of Taxes has hotline at 0813-1050-3747 to report any wrongdoing during the tax amnesty process to protect taxpayers who are about to give away delicate information about their wealth.

Is there any maximum or minimum amount of assets to be declared?

No.

Can I declare or apply for amnesty at more than one time? Just in case I forget some of the assets; I have an awful lot of them you know.

The taxpayers can apply for a maximum of three times, since the start of the program until March 31, when the program ends.

What if the asset is still under another family member's name? Do I have to report the asset under my name or could they report it as theirs?

The taxpayer can declare the assets as their own but first, he or she must make a written statement declaring the ownership of said assets. The same is applicable to assets that are registered on the names of the taxpayer's underage children.

Now that I have completed the forms, where can I pay the tax? 

After completing the correct forms, listing unreported assets and calculating the amount of tax that is due, the taxpayer must pay tax to one of the 77 designated banks, including Indonesia's biggest lenders by assets, such as state-controlled Bank Rakyat Indonesia, Bank Mandiri, Bank Negara Indonesia and private lender Bank Central Asia.

How do I repatriate the assets?

Only rupiah-denominated cash can be repatriated back into the country, meaning stocks, mutual funds and properties held abroad must be sold first. The money enters Indonesia through gateway financial institutions, including 18 lenders and then it can be invested by the lenders, 18 approved investment managers or 19 approved stockbrokers.

What are the gateways?

The banks are Bank Jawa Barat dan Banten, Bank Permata, Bank Maybank Indonesia, Bank Pan Indonesia, Bank CIMB Niaga, Bank UOB Indonesia, Citibank, Bank DBS Indonesia, Bank Tabungan Negara, Bank Mega, Bank Danamon Indonesia, Bank Bukopin, Bank Syariah Mandiri, HSBC, Bank Central Asia, Bank Rakyat Indonesia, Bank Mandiri and Bank Negara Indonesia.

The investment managers are Danareksa Investment Management, Schroder Investment Management Indonesia, Eastpring Investment Indonesia, Manulife Aset Management Indonesia, Bahana TCW Investment Management, Mandiri Management Investasi, BNP Paribas Investment Partners, Batavia Prosperindo Aset Manajemen, BNI Asset Management, Panin Asset Management, Ashmore Asset Management Indonesia, Sinarmas Asset Management, Trimegah Asset Management, PNM Investment Management, Ciptadana Asset Management, Bowsprit Asset Management and Indosurya Asset Management.

The stockbrokers are Mandiri Sekuritas, Sinarmas Sekuritas, Panin Sekuritas, CLSA Indonesia, CIMB Securities Indonesia, Trimegah Sekuritas Indonesia, RHB Securities Indonesia, Daewoo Securities Indonesia, Bahana Securities, Indo Premier Securities, UOB Kay Hian Securities, BNI Securities, Sucorinvest Central Gani, Danpac Sekuritas, Panca Global Securities, MNC Securities, Pacific Capital, Mega Capital Indonesia and Pratama Capital Indonesia.

Do I have to comb through and evaluate all the investment instruments option by myself or can the banks take care of that for me?

Taxpayers can choose any investment instruments of their liking by themselves or with help from banking officials at the gateways. The repatriated assets must remain in the county for at least three years. The assets can be invested in government bonds, state-owned corporate bonds, infrastructure projects and other investment instruments under the auspices of a gateway.

Can I invest in property or mutual funds, or even stocks? What if I want to put the money on my niece's bakery startup? Is it possible?

Of course, you can. There are 18 investment managers and 19 stockbrokers to help you invest in mutual funds or stocks. If you want to invest in properties or startups, you just need to open a special tax amnesty account at one of the 18 gateway banks and then report the investment every three months to the lender.

You can even invest in gold, apartments or use the money in your own company as working capital to build factories, as long as you follow the process and report to the bank every three months.

How closely will the police and the attorney general monitor transactions under the tax amnesty?

Any transactions under the tax amnesty program are inaccessible to law enforcers. Officials at the tax office will not share any private information related to the tax amnesty program with law enforcers or anyone else.

We do not ask where the money came from and our officers are not allowed to ask.

Law enforcement agencies, such as the police, prosecutors, and the Corruption Eradication Commission [KPK] know this. We will not share the data until the end of time.

I am a foreigner, who has been paying tax in Indonesia for some time now. Can I apply for tax amnesty?

The tax amnesty program is intended for all taxpayers in Indonesia, including Indonesian citizens and foreigners who have stayed in the country for longer than 183 days, meaning these foreigners are taxpayers and can apply for tax amnesty.

When is the deadline for asset repatriation?

The deadline to repatriate assets for the declaration in the July-September period — or the first period when the tariff is still 2 percent — and the second period in October-December — when the tariff is 3 percent — is Dec. 31.

The deadline for the January-March period — when the tariff is 5 percent — is March 31.

In the meantime, taxpayers can hand over a written statement to the tax office that states their willingness to repatriate their assets.

Yustinus Prastowo, executive director of Center for Indonesia Taxation Analysis [CITA], has advised taxpayers not to miss the deadline. 'If until Dec. 31 a taxpayer fails to transfer his assets, then he will receive a grave punishment. The assets will be considered as a new tax object with 30 percent tariff and 200 percent [of the 30 percent] penalty,' he said.

After paying the tax, the taxpayers must hand out all proof of payment and statements — including a tax report copy, a statement to return the planned repatriated asset and a statement not to move the repatriated assets from Indonesia for three years and a statement about the business scope for small and medium enterprises — back to the tax office.

The taxpayer will receive a receipt that he or she handed the statements to the tax office. The tax amnesty certificate will be ready within 10 working days after the application.

How far are we from our goal?

As of Monday, taxpayers have declared Rp 47 trillion [$3.5 billion] in unreported assets, which include Rp 1.5 trillion worth of repatriated assets.

The government has so far received Rp 947 billion in tax as a result of the tax amnesty program.

The numbers, however, are still far behind the government's target of Rp 165 trillion in additional tax revenue, Rp 4,000 trillion in declared assets and Rp 1,000 trillion in repatriated assets.

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