Directorate General of Taxes (DGT) has arranged 2017 as the year of law enforcement. There is still one more month left until March for Taxpayers to take the opportunity to repent by using the tax amnesty facility. After that, DGT make sure that they will be stricter and more intensive in conducting audits, especially to those not participating in the program of tax amnesty.
Meanwhile, for Taxpayers already obtaining the amnesty from the government, DGT suggest that they should not feel relieved too soon. Because, in case additional assets are discovered later but not yet reported, a heavier sanction may still be awaiting at the end of the tunnel.
Further related to the audit policy to be conducted by DGT after the tax amnesty program, the following is MUC Tax Guide’s interview with Deputy Director of Audit Planning of the Directorate General of Taxes, Muhammad Tunjung Nugroho, Monday (13/2):
The tax amnesty program is coming to an end, what is the audit strategy to be conducted by DGT?
We pay attention to 2 (two) things. First, for Taxpayers participating in the tax amnesty, and second, for those not participating. For those participating (in the tax amnesty), it is impossible for us to check their past tax compliance, especially for taxes before the year 2015, such as Income Tax, Value Added Tax (VAT) and Sales Tax on Luxury Goods. However, we are still authorized, under Law Number 11 Year 2016 on Tax Amnesty, to check their assets. We will ensure that the assets reported in the tax amnesty have included the whole assets, especially, the assets acquired before the year 2015 but not yet reported in the Monthly Tax Return and not included in the tax amnesty.
What is the sanction in case of discovery of assets not yet declared by tax amnesty participant Taxpayers?
We will apply (that of stated) in Article 18 of the regulation (Law Number 11/2016), that (the Taxpayers) will be subject to administration sanction of 200%. We will implement the law enforcement. Of course, we have a standard operating procedure in conducting an audit. We will consider prioritizing certain assets like those meeting the materiality aspect.
In other words, there is no exception, even though for the Taxpayers participating in the tax amnesty?
Yes, for the tax obligation, we give amnesty, and will not touch (the Taxpayers). We will only cross-check the assets to ensure that there are no more assets hidden. If they have reported all of the assets owned, they may feel relieved. But if there are still assets not yet reported, it is better to report it immediately, especially since the third period of tax amnesty will remain until 31 March 2017.
So, what is the point of tax amnesty if the Taxpayers remain haunted by the audit risk in the year of law enforcement?
We would like to encourage improvement in the future. Through tax amnesty, DGT hope to end the past taxation problem, but the Taxpayers shall commit to improve themselves and their compliance in the future. If there is shortcoming in the past that made the Income Tax Return was filled inaccurately, it should not be repeated. Thus, continuous and sustainable compliance can be created. That is our message for Taxpayers participating in the tax amnesty.
Then, how is the audit strategy for Taxpayers not participating in the tax amnesty?
Indeed, the Taxpayers not participating are our focus. We will check the data of those not participating, and will go through the assets owned but not included in the Income Tax Return up to the year 2015.
Any sanction for the Taxpayers not yet complied?
We will treat them in accordance with Law Number 11 Year 2016 on Tax Amnesty. They will be subject to administration sanction. Not only that, we will also investigate their tax obligation. They can be charged under 2 (two) laws, namely, Taxation Law and Tax Amnesty Law. Thus, the assets will be audited, and the tax obligation will be investigated as long as the stipulation or the prosecution has not expired.
So, the sanction will be more serious for Taxpayers not participating in the tax amnesty?
Yes, it is a must, since they are not taking the opportunity to participate in the tax amnesty, while the reporting of assets and taxation (obligation) is not proper yet. The government has provided amnesty facility, but (they) still do not take it. As a consequence, we will conduct an audit and the sanction will be higher. However, if the Taxpayers do not participate in the tax amnesty but have complied in the asset reporting and in paying tax, (then) there will not be any sanction. It is important to note, that even though the third period of tax amnesty will end in March, we are authorized to conduct an audit to the Taxpayers not participating and will deal with them at maximum up to 2.5 (two and half) years ahead.
What is the strategy for these 2.5 years?
Technically the strategy becomes our domain only. But, we will use various data sources that we own as comparable to the assets owned by the Taxpayers. The data can be obtained from any source, including both internal and external data.
Is banking data included?
Yes, we will inquire the data from any source, as long as it is possible to conduct. We will also use the Money Laundering Law to capture the Taxpayers proven committing tax crime. We are allowed to do it, since the tax crime is one of the basic crimes to charge money laundering offense.
How DGT detect the relation between the tax fraud and money laundering crime?
Any tax crime (or) tax fraud will output in life style. For instance, buying other items or assets. The money is less likely being kept. The correlation is that the life style is like consumption and investment.
How DGT ensure that the tax auditors will work maximally and professionally, thus, their regular works will not be interrupted with extra demands after tax amnesty?
Sure, it can run as usual, by ensuring that the auditors will do the works in parallel. Because, when conducting a regular audit, (they) can go through the assets. It is like killing two birds with one stone. We are used to it, because the tax subject is similar. The difference is only the object. One is the asset of Taxpayers, the other is the tax of theirs. Two different things, but correlate to each other.