The Directorate General of Taxation has implemented a standard method to calculate the turnovers of traders or business entities following the issuance of the Finance Ministerial Regulation.
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Kompas/Totok Wijayanto
A tax officer from Central Jakarta Tax Office attaches a “tax evader” sticker at a restaurant at Plaza Senayan shopping mall in Jakarta recently.
JAKARTA, KOMPAS — The Directorate General of Taxation has implemented a standard method to calculate the turnovers of traders or business entities following the issuance of Finance Ministerial Regulation No. 15/ 2018 on alternative ways to calculate gross turnover.
This method is useful in determining tax liabilities more objectively as well as to provide legal certainty for taxpayers or tax officials. "It\'s used if taxpayers refuse to show their bookkeeping or do not have adequate bookkeeping," said director of counseling services and public relations at the Directorate General of Taxation Hestu Yoga Saksama in Jakarta on Friday (2/3).
Law Number 36/2008 on income tax, among others, mandates the government to issue a regulation by the finance minister on alternative ways of calculating gross turnover. It is useful to test taxpayer reports that are indicated to be inauthentic.
This is necessary given that taxation in Indonesia is based on the principle of self-assessment. Finance Ministerial Regulation No. 15/2018 as mandated by the law was issued in mid-February.
Yoga said, pursuant to Law No. 16/2009 on general provisions and procedures of taxation, any person conducting business activities or independent employers in Indonesia are obliged to keep financial records. As with corporate taxpayers, this provision is not imposed on employees and businesses with a turnover of up to Rp 4.8 billion per year, aka small and medium businesses.
Referring to Law No. 16/2009, the bookkeeping should at least consist of information on assets, liabilities, capital, income and expenses, as well as sales and purchases so as to be able to calculate tax dues. The bookkeeping should be made in good faith and reflect the actual circumstances or business activities.
"In practice, when an inspection occurs, many taxpayers do not keep books or refuse to provide their books to the inspector. Thus, the inspector does not know exactly the size of the gross turnover to be used as the basis for calculating the actual tax payment," said Yoga.
In that context, Finance Ministerial Regulation No. 15/2018 provides guidance on the calculation of turnover to be used to determine tax payments. This turnover is calculated on the basis of cash and non-cash transactions, sources and uses of funds, units and/or volumes, calculation of living expenses, increases in net worth, based on the tax returns in the previous year and economic projections.
This method, according to Yoga, has been tried and tested in many countries. In the tax language, this is called the indirect method, used to test data derived from the direct method, such as a bookkeeping.
If the tax assessment made by the tax inspector is considered wrong, the taxpayer may lodge an objection and subsequently file an appeal with the court.
"This rule actually gives legal certainty and justice to the taxpayer because the inspector can only calculate based on predetermined methods. Tax officials cannot arbitrarily calculate by other methods," Yoga said.
It needs to be refined
Separately, executive director of the Center for Indonesian Taxation Analysis (CITA) Yustinus Prastowo, said the new provision was positive because it provided legal certainty to taxpayers as well as tax officials.
However, Prastowo believes that some things need to be refined, such as the term "not fully" in Article 1. This term has multiple interpretations, which could incriminate taxpayers so it needs to be clarified. The mechanism for filing objections by the taxpayer should also be regulated in the same provisions.
No less important, says Prastowo, is the need for simpler accounting standards. The current standards, the Financial Accounting Standards (SAK) issued by the Indonesian Institute of Accountants, are too complex, especially for independent professional employees and owners of small and medium enterprises.
