"In this world nothing can be said to be certain, except death and taxes ..."
so, Benjamin Franklin said a few years. But was it not?
Most of us would agree that death, at least, is certain, but the release of documents Panama brought the "certainty" of this point. Leaks have created a level of discussion on tax evasion and avoidance unprecedented and highlighted more than ever the extent and prevalence of practices that are increasingly considered immoral at best.
Those who paid attention, namely those who do not disable / yawn at the first mention of the word tax, are not surprised. Richard Murphy and Tax Justice Network UK, for example, have campaigned for years against the aggressive tax avoidance, mainly by multinationals, and the effect of practices on developing countries and the poorest in society .
Whether considered a certainty or not, there is nothing as permanent as change (so says Heraclitus - a few years before Franklin) and the time they are definitely a change. The G20 and the OECD has finally addressed the issue of the fight against unfair tax practices, emitting 15 action plans last year, agreed by 60 countries, as part of the project said BEPS. While the Tax Justice Network, among others, says this is insufficient, we can not deny that they have a significant impact. An estimated 70 percent of cross-border trade is between related parties - setting transfer prices between these entities is a main area of concern - and, in one example of the impact, it is reported that the BEPS project already led to 80 percent of multinational UK- rethinking their tax strategies. Pascal Saint-Amans, Director of the Policy Centre for Tax Administration, one of the most influential figures in the global fiscal, said, "Playtime is over."
What does this mean for Indonesia and the readers of this publication? Well, for starters, Indonesia is among the 60 signatories of the agreed action plans; she participated with enthusiasm and was one of the first to adopt the proposed amendment.
Multinational managers here (or finance them) are likely to find that, at the very least, alternative or additional reports will be necessary. In many cases, the business model may change over time and this will impact on key performance indicators and incentive systems. I remember an occasion when, after completing the study of transfer prices of the subsidiary of a multinational here (Defense reported profits locally), at a party at home, I heard the CEO of the same company lamenting the fact that he could not meet his targets as seat kept sucking all the money
But the trend is more important and the biggest news in Indonesia is the impending tax amnesty - a big plan against the local tax evasion by offering lower rates on previously undeclared assets and income sources. The idea is that this will bring in about US $ 4.5 billion in immediate tax funds (already allocated to projects in the state budget) and also help increase the level of compliance and tax compared GDP. This is currently sitting around or below 12 percent - (!). Lowest G20, with the exception of Saudi Arabia, and is quite frankly untenable
At present, the amnesty will affect expatriates and the inhabitants.
It is recognized that expatriates are not the targets and would be in a case that account for a very small percentage of the targeted funds, but there are no distinction in treatment between different types of tax residents based on citizenship.
Many people may be looking at the tax amnesty as an opportunity to wipe the slate clean tax at minimal cost, but others are not so sure, as evidenced by delays passage of the bill by Parliament. Pause for effect.
Much of the concern of some sectors regarding implementation may arise from the application resulting taxes on the newly declared wealth. It is not yet clear about the basis on which preferential penalty rates payable and how it will impact on the future taxation of the same assets or income streams. If resources permit, the Indonesian Tax Administration intends to uphold and raise the tax to GDP and in two years will also have in their arsenal the possibility to appeal to the automatic exchange of information, which means there will be fewer places to hide undeclared assets.
This uncertainty also applies to expatriates who may have the added complication of interactions with different tax rules in their home country and will in most cases have less flexibility in what can be made to comply or enjoy preferential rates. They can also be affected similarly by the subsequent application of compliance and the automatic exchange of information.
In the early years of my time in Indonesia, a common response to hearing that I am a tax advisor was "in Indonesia - no one pays taxes here, have they?" Well, the fact is that, as mentioned above, too few have paid their share, but the trend, and the desire to maintain this trend is clear.
What does the limited compliance is too little pay too. That amnesty will manage to correct this imbalance or not, all taxpayers must ensure that they are able to comply.
tax evasion has always been wrong and must be eliminated. Tax avoidance is legal, but was marred by artificial constructions. Tax planning is both legal and ethical compliance and encourages effective -. it could mean the difference between paying zero tax and pay taxes well beyond the published rates
One thing is clear, if not certain - taxpayers should be aware not only of their obligations but also their rights to allow both alignment with the changing dynamics of global taxation and locally to help fulfill the potential of Indonesia [