In order to give opportunities for Individual Taxpayers to voluntarily disclose their outstanding tax obligations through Income Tax payment based on assets disclosure, the Government of Indonesia enacted the Voluntary Disclosure Program (“PPS”) for Individual Taxpayers.
Definition
PPS is a program for Individual Taxpayers to voluntarily disclose their outstanding tax obligations through Income Tax payment based on assets disclosure.
Providing opportunities for Individual Taxpayers to voluntarily report or disclose tax obligations that have not been fulfilled is done through:
Payment of Income Tax based on the disclosure of assets that are not or have not been fully reported by the participants of the Tax Amnesty program; and
Payment of Income Tax based on the disclosure of assets that have not been reported in the Annual Individual Income Tax Return for Fiscal Year 2020.
PPS Benefits
No tax assessments are issued on the Fiscal Year 2016-2020 tax obligations, unless there is other data and/or information regarding assets that have not been/less disclosed in the Asset Disclosure Notice (“SPPH”). The tax obligations include individual income tax, withholding and/or collection of income tax, and value-added tax, except for taxes that have been withheld or collected but not deposited.
Data/information sourced from SPPH and its attachments that are administered by the Ministry of Finance or other parties related to the implementation of the HPP Law cannot be used as a basis for research, investigation, and/or criminal prosecution of taxpayers.
PPS Participant
PPS participants are Individual Taxpayers with the following criteria:
Posses a Tax Identification Number;
Submitted Annual Income Tax Return for the Fiscal Year 2020;
Are not being tax audited for the Fiscal Year 2016, Fiscal Year 2017, Fiscal Year 20I8, Fiscal Year 2019, and/or Fiscal Year 2020;
No preliminary evidence is being examined, for the Fiscal Year 2016, Fiscal Year 2017, Fiscal Year 2018, Fiscal Year 2019, and/or Fiscal Year 2020;
Not under investigation for criminal acts in the field of taxation;
Not currently in the judicial process for criminal acts in the taxation sector; and/or
Not currently serving a criminal sentence for a crime in the taxation sector.
The above criteria are applicable to the obligation of Income Tax, withholding and/or collection of Income Tax, and Value Added Tax on Individual Taxpayers.
PPS Disclosure Basis
PPS disclosure basis is net assets. Net assets are the value of assets minus the liabilities (value of debt). Net assets are considered as additional income received or earned by an Individual Tax Subject in the Fiscal Year 2020.
Individual Taxpayers may disclose net Assets that:
Was obtained from 1 January 2016 until 31 December 2020;
Still owned as of 31 December 2020; and
Has not been reported in the Annual Individual Income Tax Return for Fiscal Year 2020,
Determination of Assets Value and Liabilities Value
The tax base for Assets that have not been reported in the Annual Individual Income Tax Return for Fiscal Year 2020 is calculated as follows:
nominal value, for Assets in the form of cash or cash equivalents; or
cost, for Assets other than cash or cash equivalents.
In the event that the acquisition price is unknown, the Individual Taxpayers may use the fair value which describes the conditions as of 31 December 2020 of the same or equivalent assets based on the assessment of the Individual Taxpayers.
Liability value is the value of debt, without interest, related to the disclosed assets.
In the event that the value of the Assets and the value of Debt use a currency other than Rupiah, the value of the Assets and the value of Debt are determined in Rupiah using the prevailing tax rate at the end of the Fiscal Year 2020.
PPS Tax Rate
Tax Rate | Net Assets | Investment Terms |
12% | Net assets in the territory of the Republic of Indonesia | Invested in:
|
14% | Net assets in the territory of the Republic of Indonesia | Not invested in:
|
12% | Net assets outside the territory of the Republic of Indonesia which are transferred to the territory of the Republic of Indonesia. | Invested in:
|
14% | Net assets outside the territory of the Republic of Indonesia which are transferred to the territory of the Republic of Indonesia. | Not invested in:
|
18% | Net assets that are outside the territory of the Republic of Indonesia and are not transferred to the territory of the Republic of Indonesia. | - |
PPS Requirements
Paying final Income Tax on the disclosure of net assets;
Withdraw application of:
refund of tax overpayment;
reduction or elimination of administrative sanctions;
reduction or cancellation of an incorrect tax assessment letter;
reduction or cancellation of the Tax Collection Letter that is not correct;
objection;
rectification;
appeal;
lawsuit; and/or
judicial review,
in the event that the Individual Taxpayers are submitting the application and a decision has not been issued.
PPS Net Assets Disclosure Procedure
Individual Taxpayers disclose net assets by electronically filing the notification letter of assets disclosure (“SPPH”) in the form of an e-form to the Director General of Taxes through the DGT website from 1 January 2022 to 30 June 2022.
SPPH must be submitted with:
NTPN as proof of final Income Tax payment;
a list of details of net assets that have not been or are under-reported in the Annual Individual Income Tax Return for Fiscal Year 2020;
list of debts;
a statement of transferring net assets into the territory of the Republic of Indonesia, in the event that an Individual Taxpayer intends to transfer net assets outside the territory of the Republic of Indonesia into the territory of the Republic of Indonesia; and
in the event that an Individual Taxpayer intends to invest the net assets, the Individual Taxpayer must provide a statement that they will invest their net assets in:
business activities in the natural resources processing sector or the renewable energy sector within the territory of the Republic of Indonesia; and/or
government securities.
statement of revocation of application and a detailed list of applications that have been revoked, in the event that an Individual Taxpayer is submitting the application and a decision has not been issued.
Upon submission of the SPPH, the Head of Tax Office on behalf of the Director General of Taxes issues a Certificate electronically to the Taxpayer no later than 1 (one) working day after the SPPH is submitted.
In the event that DGT finds other data and/or information regarding the net assets value that has not been disclosed or fully disclosed, the net assets value will be deemed as income of the Fiscal Year 2022 and the PPS participant will be subject to the following sanctions:
net assets value will be subject to final income tax at the rate of 30%; and
administrative sanction (i.e. tax interest) as stipulated in Article 13 paragraph (2) of Law Number 6 Year 1983 regarding General Tax Regulations and Procedures and its amendments,
through the issuance of the Underpayment Tax Assessment Letter by DGT.
PPS Payment Procedure
Final Income Tax payments are paid to the state treasury through perception banks, perception posts, or other institutions using a Tax Payment Slip or billing code with tax account code 411128 and deposit type code 428. Payment can not be done through overbooking.
After making the payment, PPS participants will receive a state revenue receipt as proof of payment of final Income Tax which has been validated with NTPN.
SPPH Amendment Procedure
Individual Taxpayers may submit the second, third, and the following SPPH electronically through the website of the Directorate General of Taxes in the event that there is:
writing error or calculation error of the Taxpayer in filling the SPPH;
additional net Assets that have not been or are not disclosed in the SPPH;
reduction in net Assets that have been disclosed in the SPPH;
changes in the use of final Income Tax rates for the disclosure of net Assets; and/or
other circumstances that resulted in the invalidity of the previous SPPH.
The second, third, and following SPPH submissions can be made in the period from 1 January 2022 to 30 June 2022.
The second, third, and following SPPH contain:
all net assets after the change which consists of net assets that are not changed; net assets changed, other than those written off; and the newly disclosed net assets, from those listed in the previous SPPH; and
correction of writing errors, correction of calculation errors, and/or changes to the use of final Income Tax rates.
In the event that based on the results of the second, third, and so on SPPH calculations, there are:
the amount of final Income Tax that is underpaid, the Taxpayer must settle the underpayment before the SPPH is submitted; or
the amount of final Income Tax that is overpaid, the Taxpayer may request a refund of the overpayment of tax that should not be payable or make an overbooking, for the tax overpayment in accordance with the provisions of the legislation in the field of taxation.
Upon submission of the SPPH, the Head of Tax Office on behalf of the Director General of Taxes issues a Certificate electronically to the Taxpayer by no later than 1 (one) working day after the SPPH is submitted.
Certificate issued for the submission of the second, third, and so on SPPH replaces the Certificate issued previously.
SPPH Revocation Procedure
PPS Participants can revoke the SPPH from 1 January 2022 until 30 June 2022. The revocation of SPPH can be done within 24 hours and 7 days period of West Indonesian Time.
The revocation can be done through filing the SPPH by filling 0 in the Asset, Liability, and Net Assets columns.
Upon submission of the SPPH, the Head of Tax Office on behalf of the Director General of Taxes issues a Certificate electronically to the Taxpayer by no later than 1 (one) working day after the SPPH is submitted.
In the event that there is an overpayment of final income tax due to the revocation of SPPH, taxpayers can apply for a tax refund or overbooking following the applicable tax laws and regulations.
Upon taxpayers who revoke the SPPH, the following conditions apply:
Certificates issued before the revocation of SPPH, become null and void;
The certificate is deemed as proof of the revocation of SPPH;
Taxpayers are deemed of not disclosing the net assets value;
Taxpayers are not subject to Article 8 and/or Article 22 Ministry of Finance Regulation Number 196/PMK.03/2021; and
Taxpayers can not resubmit SPPH.
In the event that there is a decision letter regarding an appeal, lawsuit, and/or judicial review of taxpayers that revoke the SPPH, the decision letter will be the basis for DGT to further carry out in accordance with the applicable tax laws and regulations.
Example for Voluntary Disclosure Program for Individuals
Mr. David is an Individual Taxpayer who has submitted his 2020 Individual Income Tax Return. However, he is aware that there is an unreported property in the form of a KPR house in BSD amounting to IDR 5 billion with a lease amount of IDR 3 billion which has not been paid. He acquired this property in 2016. Mr. David intends to join PPS. What should he do?
Mr. David can take part in the PPS by no later than the end of June 2020. To take part in the PPS, Mr. David must calculate the net assets that have not been disclosed, which is the value of assets minus the value of debts of IDR 2 billion.
After that, Mr. David must pay Final Income Tax at a rate of 14% because it is not invested in the new renewable energy sector and/or Government Securities with the following calculation:
14% x IDR 2 Billion = IDR 280 Million
The payment is made to the state treasury through the perception bank using a tax payment slip or billing code with a tax account code of 411128 and a payment code of 428. After that, Mr. David will receive an NTPN.
After making the payment, Mr. David must submit the SPPH electronically through the DGT website. Then, the Head of Tax Office on behalf of the Director General of Taxes issues a Certificate electronically to Mr. David by no later than 1 (one) working day after the SPPH is submitted.
Legal Basis:
Law Number 7 Year 2021 regarding Harmonization of Tax Regulations
Law Number 11 Year 2016 regarding Tax Amnesty
Minister of Finance Regulation Number 196/PMK.03/2021 regarding Voluntary Disclosure Program Procedure
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