Summary of Tax Regulation (April)

Summary of Tax Regulation

22/PMK.03/2008, Requirements and Performance of Rights and Obligations of a Proxy

A proxy may consist of tax consultants and non tax consultants. Included in the category of non consultant are permanent employees/staf. But an employee may only be a proxy of: 1) Individual Taxpayer of non entrepreneur/non independent personal service provider; 2) Individual Taxpayer of entrepreneur/ independent personal service provider with maximum gross business turnover/revenue of IDR1,8 Billion/ year; and 3) Corporate taxpayers with maximum gross business turnover of IDR2,4 Billion/year. The employee appointed as a proxy should meet the requirements: 1) Owning a Tax ID No.; 2) Having filed the Annual Income Tax Return of the latest tax year; 3) Owning tax competency certificate/formal education certificate in taxation for a minimum of Diploma III degree, issued by a state university/private university with A accreditation; and 4) Obtaining a special proxy letter from the Taxpayer.

SE-16/PJ/2008, Affirmation of Proxy Appointment Using Special Proxy Letter

Corporate taxpayers with gross business turnover more than IDR 2,4 Billion/year and individual taxpayers with gross business turnover/revenue more than IDR 1,8 Billion/year are not allowed to give a proxy to their employees/staff. However, all taxpayers can assign their employees only for the following: 1) Signing tax documents such as Tax Invoices and/or Tax Payment Slips, only with an Appointment Letter and not necessarily a Special Proxy Letter; 2) Submitting tax documents through tax offices, without a Special Proxy Letter/an Appointment Letter; and 3) Delivering and/or receiving of tax documents, other than those submitted through the tax offices, without an Appointment Letter.

18/PMK.03/2008, Annulment of Administrative Sanction on Late Settlement of Tax Underpayment in relation with Annual Tax Return for Tax Year 2007 and the previous Tax Year including Revision of Annual Tax Return for the Tax Years prior to Tax Year 2007

Taxpayers which in 2008 revise their annual income tax returns prior to tax year 2007 resulting in bigger income tax due, are given with annulment of administrative sanction in form of interest due to late settlement of tax underpayment. In addition, taxpayers which in 2008 register themselves voluntarily to obtain their tax ID numbers and file their annual tax returns for tax year 2007 and the pervious tax years, are given annulment of administrative sanction in form of interest on unpaid/underpaid taxes for tax year 2007 and the previous tax years.

193/PMK.03/2007, Limits of Business Turnover, Transfer and Overpayment for Taxpayers Fulfilling Certain Requirements Entitled To Preliminary Refund of Tax Overpayment

Taxpayers fulfilling certain requirements (1.individuals not conducting business/independent personal service activities; 2. individual conducting business/independent personal services with total business turnover and overpayment up to certain amounts; 3. entities with total business turnover and overpayment up to certain amounts; 4. VAT-registered Persons (PKP) filing periodic VAT returns with total transfers and overpayment up to certain amounts), may be entitled to preliminary refund of tax overpayment with certain percentage. Decision letter on preliminary refund of tax overpayment shall be issued within a maximum of 1 month (for VAT) and 3 months (for Income Tax ) starting from the time the complete application is received and the Directorate General of Taxes has made examination on the application.

194/PMK.03/2007, Procedure of Objection Application and Settlement

This Regulation of Finance Minister introduces a new way in filing an objection letter named e-filing via ASP. As an evidence of an objection submission via e-filing, the taxpayer shall receive an electronic receipt note. The conventional letter filing such as direct delivery and post delivery are still maintained.

182/PMK.03/2007, Procedure of Periodic Tax Return Filing for Taxpayers with Certain Criteria that May File Several Periodic Tax Returns within One Periodic Tax Return

Taxpayers with certain criteria, that are small scale taxpayers or taxpayers of certain areas, may file 1 (one) periodic tax return covering several tax periods. Definition of small scale taxpayers refers to 1) Individual taxpayers having business turnover/income from independent personal services per annum not more than IDR600 million; and 2) Corporate taxpayers fully owned by Indonesian Citizens having business turnover per annum not more than IDR900 million.

191/PMK.03/2007, Issuance of Tax Assessment Notice upon Tax Overpayment Refund Application of Taxpayers under Preliminary Criminal Evidence Investigation in Taxation Field.

Tax assessment notice on tax overpayment refund application filed by a taxpayer under a preliminary evidence investigation, is not obliged to be issued within a maximum of 12 month period since the complete application is received. The issuance of tax assessment notice is delayed starting from the time when the notification of preliminary evidence investigation is delivered to: taxpayer, authorized person, employee, or adult member of taxpayer’s family.

183/PMK.03/2007, Taxpayers of Certain Income Tax Exempted from Obligation of Income Tax Return Filing

Individual taxpayers having net income per annum not exceeding Non Taxable Income (Penghasilan Tidak Kena Pajak: PTKP), exempted from the obligation of filing periodic return of Income Tax Art. 25 return and annual return of Individual Income Tax. For individual taxpayers not conducting business/independent personal service activities, only the obligation of periodic return of Income Tax Article 25 is exempted.

192/PMK.03/2007, Procedure of Determination of Taxpayers with Certain Criteria in framework of Initial Refund of Tax Overpayment

Tax assessment notice on tax overpayment refund application filed by a taxpayer under a preliminary evidence investigation, is not obliged to be issued within a maximum of 12 month period since the complete application is received. The issuance of tax assessment notice is delayed starting from the time when the notification of preliminary evidence investigation is delivered to: taxpayer, authorized person, employee, or adult member of taxpayer’s family.

185/PMK.03/2007, Procedure of Receiving and Processing of Tax Return

Upon tax returns filed by taxpayers, there are basically 2 (two) actions to be taken: examination and recording. If based on examination the tax return is considered complete, the taxpayer shall be given a receipt note of the tax return. Further, recording process will be made on the tax return. If based on examination the tax return is considered incomplete, the taxpayer shall be given with the opportunity to complete the requirements based on the prevailing tax regulation.

For individuals voluntarily register themselves to obtain Taxpayer Identification Number at the latest on 31 December 2008 and file their Annual Income Tax Returns of year 2007 and the subsequent years not more than 31 March 2009, they will be entitled to obtain facilities of administrative sanction annulment and no tax audits.

Announcement Number PENG – 02/PJ.09/2008 on Facility of Income Tax Sanction annulment