Tax Consultants……Should We Need Them? (税務コンサルタント。。。。私たちは、彼らを必要とすべきでしょうか?)

There are various reasons most taxpayers have had for not using tax consultant  services . However, the new tax regulations concerning proxy affirm that those taxpayers may not have a lot of choices now.

The existence of skillful staff in taxation area is one of the basic reasons why majority corporate taxpayers do not use tax consultant services . Using these services means extra money to pay their service fee. Having competent staff, taxpayers simply optimize their staff in performing their company’s tax rights and obligations.

What happens now when the Finance Minister Regulation (Peraturan Menteri Keuangan: PMK) No.22/PMK.03/2008 and the Circular of Director General of Taxes No.SE-16/PJ./2008 have been issued? The above so called cost efficiency strategy will no longer be fully carried out. These two regulations clearly limit such opportunity.

Flexibility of ‘Small’ Taxpayers

小企業の柔軟性/適応性

Based on PMK No. 22/PMK.03/2008, a proxy can be either a consultant or a non consultant. Included in the category of non consultant are permanent employees/staff. In other words, a permanent employee/staff can still receive an authority from the employer as taxpayer to perform the employer’s tax rights and/or obligations. However, according to this PMK issued on 06 February 2008, the taxpayers who can give such authority to their employees/staff are only those categorized as ‘small’ taxpayers. The criteria of ‘small’ taxpayers are:

·   Individual Taxpayers of non entrepreneur/non independent personal service provider;

·   Individual Taxpayers of entrepreneur/independent personal services provider with maximum gross business   turnover/ revenue of IDR 1,8 Billion / year ; or

·   Corporate Taxpayers with maximum gross business turnover of IDR 2,4 Billion/year.

As further regulated in the Circular no. SE-16/PJ./2008, the non consultant category including employees eligible for being appointed as a proxy should meet these requirements:

a. Owning a Tax ID No. ;

b.   Having filed the Annual Income Tax Return of the latest tax year;

c.   Owning tax competency certificate (brevet) /formal education certificate in taxation for a minimum of Diploma III degree, issued by a state university/private university with A accreditation; and

d.   Obtaining a special proxy letter from the Taxpayer  giving the authority.

Limitation of ‘Large’ Taxpayers

大企業の制約/限界

As previously mentioned , based on the PMK No. 22/PMK.03/2008, 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  categorized as ‘large’ taxpayers are not allowed to  give a proxy to their employees/staff. However, pursuant to the issuance of the Circular SE-16/PJ./2008 on 10 March 2008, such limitation is lessened.

The said Circular states that “directors, commissioners and majority or controlling shareholders including employees of a Taxpayer who actually have the authority to make policies and/or decisions in running the company may perform tax rights and/or obligations of the said taxpayer without any special proxy letter . Thus, it can be concluded that employees/staff having the authority in a company of a large taxpayer may automatically perform the company’s tax rights and/or obligations . The question is, how about the rest of employees who do not have such authority.

The Circular stipulates that specifically for the tax rights and/or obligations performed, taxpayers are allowed to assign their employees in 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 tax documents, other than those submitted through tax offices, without an Appointment Letter.

Upon this Circular’s provision, the intricacy occurs when due to some reason the authorized persons in the company could not perform the company’s tax rights ad/or obligations (other than those three activities in the points mentioned above) , large taxpayers will have no other choice than to use tax consultant services. They will have to pay a tax consultant just for giving the signature in their monthly tax returns, for instance.

Moreover, another matter that forces the large taxpayers to use tax consultant services is related to unclear definition of ‘ who actually have the authority to make policies and/or decisions in running the company may perform tax rights and/or obligations of the said ’. In practice, some of tax officers require written evidence confirming that the said employee is an employee as accorded with the said provision. Without such evidence, they would not give approval of the taxpayer’s rights and/or obligations performed.

The most extreme thing occurs when the written evidence is already provided,  certain tax officers are still unwilling to handle the process . They insist to handle it only if the authorized persons performing the tax rights and/or obligations are the Directors. What happen when the large  taxpayers deal with such a tax officer and their directors are not be able to do the tax rights and/or obligations because of that? Once again, there is no other choice than to seek tax consultant’s assistance, for instance, to sign a monthly tax return.

Tips in Choosing Tax Consultants

コンサルタントを選ぶポイント

The current condition really forces taxpayers to utilize tax consultant services. When this should be done, one thing for sure is being selective in choosing tax consultants. Legality, competency and ethics are the perfect combo to base the decision. In practice, there are a quite large  number of tax consultants not having all of the criteria; few of them do not have even a single one.

Why Should Be Legalized?

The PMK No. 22/PMK.03/2008  and SE-16/PJ./2008 are the answer to this question. Besides requiring a special proxy from the taxpayers giving the authority, these regulations stipulate that the tax consultants appointed  should fulfill the following:

a. Owning a Tax ID No.;

b. Having filed the Annual Income Tax Return of the latest tax year;

c. Owning Tax Consultant License from the Director General of Taxes on behalf of the Finance Minister

Therefore, choosing a person claiming as a tax consultant with no tax consultant license, is surely not a right choice.

Why Should Be Competent?

Competency is basically required in any field of work since in general it truly contributes to the success achieved in the future. In the tax field, competency for tax consultant level does not merely relate to comprehension of technical matters, it also involves multi perspective analytical skill.

In practice, a tax consultant with most excellent taxation expertise and tax analysis skill may not always succeed to fight for his argument in a dispute with the tax authority, whereas another tax consultant having less expertise and skill may have higher potential to win a dispute case. The main strategy above all of this is to view tax issues from different perspectives, not only from the taxpayer client and tax consultant perspectives. Understanding the tax officers’ perspective and their internal working procedure is one of the key elements when finding best solution to the taxpayer clients. Certain tax consultants have such multi-perspectives due to their experience as they formerly worked in the same institution.

When tax consultants are reluctant to conform to the code of ethics in performing tax rights and/or obligation of their taxpayer clients, for instance, by not reporting the appropriate tax due or encouraging their clients to take unlawful actions over their tax cases, they actually cause losses either in terms of State tax revenue or even their taxpayer clients’ efficiency. Any misconduct done will  potentially be detected in the future time.

Thus, using unethical tax consultants who do not utilize  their own competency is absolutely not a smart choice. It will be only delaying problems, not solving them.