Getting to Know the Taxpayer Voluntary Disclosure Program

Recently, the DPR has officially ratified one of the legal products in the field of taxation, the Law on the Harmonization of Tax Regulations (UU HPP). Eight of the nine factions in the 7th plenary meeting of the DPR RI approved the ratification of the HPP Law. One of the things contained in the HUP Law is the Taxpayer Voluntary Disclosure Program.

In accordance with the provisions in the HPP Law, the government will hold a Taxpayer Voluntary Disclosure Program (PPS) from January 1, 2022 to June 30, 2022.

Definition and purpose

The Voluntary Disclosure Program is one of the programs contained in the HPP Law. It is compiled to provide an opportunity for taxpayers to disclose their assets that have not been or are not disclosed.

In an interview with one of the electronic news media, the Director of Counseling, Services and Public Relations of the Directorate General of Taxes (DJP) Neilmadrin Noor said that this program aims to increase voluntary taxpayer compliance and is carried out based on the principles of simplicity, legal certainty, and expediency.

This matter was emphasized again by the Deputy Minister of Finance that the target of this legal product is the voluntary disclosure of taxpayers. So that the main focus is not the amount of income, but voluntary compliance so that later taxpayers can enter the tax system that has been made by the government.

Subject of PPS

There are two schemes in this program. First, for Individual or Corporate Taxpayers participating in the Tax Amnesty Program (tax amnesty) on the basis of assets or assets acquired from January 1, 1985 to December 31, 2015 which were not disclosed at the time of joining the program.

The Final PPh tariff scheme in this program is 11% (percent) for declarations of foreign assets, 8% for repatriation of foreign assets and declaration of domestic assets, and 6% for repatriation of foreign assets and declarations of domestic assets invested in Surat Berharga Negara (SBN), or a Natural Resources (SDA) processing sector, or the renewable energy sector.

Second, Individual Taxpayers who are not currently undergoing examination and/or preliminary evidence examination (for the 2016 to 2020 fiscal year), are not being investigated, are not in the judicial process, are not currently serving a criminal sentence for a crime in the taxation sector, on the basis of assets or assets acquired from 2016 to 2020 (and still owned as of December 31, 2021) that have not been reported in the 2020 Annual Tax Return (SPT).

The taxpayer will be subject to a Final PPh rate of 18% for the declaration of foreign assets, 14% for the repatriation of foreign assets and the declaration of domestic assets, and 12% if the repatriation of foreign assets and the declaration of domestic assets are invested in Surat Berharga Negara (SBN), Natural Resources (SDA) processing sector, or the renewable energy sector.

Terms and benefits

Taxpayers who wish to participate in the program are required to disclose their net assets through an asset disclosure letter submitted between January 1, 2022 to June 30, 2022 and with attachments including:

  1. Statement of transferring net assets into the territory of the Republic of Indonesia (NKRI) (if the taxpayer intends to transfer net assets outside the Republic of Indonesia. The transfer of assets is carried out no later than September 30, 2022);
  2. Statement to invest in net assets (if the taxpayer intends to invest in net assets. The investment must be made no later than September 30, 2023. The holding period(the length of time a person continues to hold his investment) is five years from the time it is invested;
  3. List of property details along with information on the reported property ownership;
  4. List of Debts; and
  5. Final proof of income tax payment.

Especially for individual taxpayers in the second scheme, they are required to attach a statement to withdraw a number of applications if the taxpayer is currently filing and has not issued a decision or decision on the application. The applications in question include:

  1. Application of Objection;
  2. Application for Lawsuit;
  3. Application for Correction;
  4. Application for Appeal;
  5. Application for Refund of Excess Tax;
  6. Application for Reduction or Cancellation of an Incorrect Tax Ruling Letter;
  7. Application for Review (PK);
  8. Application for Reduction or Elimination of Administrative Sanctions; and
  9. Application for Reduction or Cancellation of Incorrect Tax Collection Letters.

After the taxpayer submits the Declaration Letter of Asset Disclosure to the DJP, the taxpayer will obtain a statement letter from the Director General of Taxes.

The benefits obtained by taxpayers when participating in the Voluntary Disclosure Program include, taxpayers will not be subjected to tax administrative sanctions in the form of an increase of 200% in Income Tax that is not or underpaid. This provision is contained in the Law Number 11 of 2016 concerning Tax Amnesty.

In addition, taxpayers will also be free from criminal charges, because of the information originating from the property disclosure letter and its attachments cannot be used as a basis for investigation and/or criminal prosecution against the taxpayers.

Better tax system

However, the HPP Law is a difficult part to separate from the series of tax reforms that have been carried out so far, both administrative reforms and policy reforms. This law will later serve as a very fundamental stepping stone for the reform process so that a fair, healthy, effective and accountable taxation system can be realized.

The implementation of the various provisions contained in the legal product is expected to play a role in supporting efforts to accelerate economic recovery.