These General Provisions on Taxation are Overhauled in the Omnibus Law 

The Job Creation Law, which carries the concept of Omnibus Law, also changes the substance of Law Number 28 Year 2007 on Taxation General Provisions and Procedures (KUP). 
 
The most fundamental change is that the Minister of Finance is given the authority to set the amount of administrative sanctions in the form of interests and fines higher than the benchmark interest rate (BI 7-Day Repo Rate). With this discretion, the amount of interest sanctions becomes more flexible, depending on the development of the benchmark interest rate considered to reflect the current economic condition more accurately. 
 
Tax Return Revision Sanctions 
 
Taxpayers who take the initiative to revise their Annual and Periodic Tax Returns resulting in larger tax payable are subject to an administrative sanction in the form of a 5% interest plus the benchmark interest rate divided by 12 months. The interest sanctions are calculated from the maturity to the payment, in a maximum of 24 months.  
 
The administrative sanctions determined by the Minister of Finance may be higher or lower than the 2% per month interest penalty applied previously. 
 
Voluntary Disclosure  
 
Taxpayers who voluntarily disclose an error in a Tax Return submission after the preliminary evidence audit resulting in a tax underpayment will be subject to a fine of 100% of the underpaid tax. The administrative penalty is lower than the original penalty of 150% of the underpaid tax. 
 
The consequence is different if the Taxpayers voluntarily disclose the error after the audit process. As long as the Tax Assessment Notice (SKP) has not been issued, the underpaid tax arose will subject to a fine of 10%, which is higher than the benchmark interest rate divided by 12 for a maximum period of 24 months. Previously, the administrative sanction applied to this condition was in the form of a 50% fine of underpaid tax.  
 
Overdue Tax Payment 
 
In the case that Taxpayers pay the tax payable after the payment due date determined by the Minister of Finance, the Taxpayers will be subject to an administrative sanction in the form of 5% interest plus the benchmark interest rate divided by 12 for a maximum period of 24 months. For the similar condition, the previous interest penalty was 2% per month. 
 
In the previous rule, the Director General of Taxes might consider the Taxpayer's application to pay in installments or to delay the payment of the tax payable for a maximum of 12 months.  However, this clause was taken out in the Job Creation Law. 
 
Tax Crime 
 
The Job Creation Law also strengthens the law enforcement for tax abuses that could harm the state. Previously, criminal penalties were imposed for repeating or more than once tax violation. Meanwhile, in the Omnibus Law, the initial offence can also be penalized for fines or confinement.  
 
For the record, abuses that can be brought to the tax court include negligence in the Tax Return submission or Tax Return submission with incorrect and incomplete contents disadvantaging the state. The threat of sanctions can be in the form of a fine of at least one to two times the amount of unpaid or underpaid taxes, or a confinement minimum of three months or a maximum of one year. 
 
This is the result of the elimination of Article 13A which previously emphasized that Taxpayers who do not submit a Tax Return or do submit the Tax Return with incorrect or incomplete content or information, so that they cause losses to state revenue, for the first time are not subject to criminal sanctions. However, in the case of a tax underpayment, the Taxpayers must settle it and pay the administrative sanction in the form of a 200% increase of the underpaid tax. 
 
Tax Underpayment Assessment Notice (SKPKB) 
 
Moreover, the Omnibus Law on Job Creation removes the phrase of "other information" in Article 13 paragraph (1) letters a and c, which is one of the bases of SKPKB issuance within five years from the time the tax becomes payable or the end of the tax period. 
 
Thus, the Director General of Taxes can no longer issue SKPKB in the following terms: 

1. If based on other information the tax payable is not paid or underpaid; and 
2. If based on other information on Value Added Tax (VAT) and Sales Tax on Luxury Goods (SLTG), the tax overpayment discrepancy should not be carried forward nor subject to a 0% rate.  

Besides, the Director General of Taxes can issue SKPKB if the VAT-Registered Persons (PKP)—after crediting the VAT In—does not deliver nor export the goods or services. 
 
Following the issuance of the SKPKB, the underpaid tax payable is subject to an administrative sanction in the form of interest equal to the benchmark interest rate plus 15% divided by 12 for a maximum period of 24 months. Previously, the administrative sanction for a similar case was 2% per month. 
 
If there is an application of sanctions in the form of interest and increment based on the VAT and SLTG audits, only one type of administrative sanction with the highest value applies. 
 
The Job Creation Law also guarantees the certainty of the amount of tax payable within five years from the time the tax becomes payable or the end of the tax period, unless The taxpayer commits a tax crime during that period. 
 
Tax Collection Letter (STP) 
 
Related to underpayment of income tax, The Job Creation Law adds several conditionals being the basis of STP issuance, as follows:  
 

1. The VAT-Registered Person does not issue certain documents whose positions are equivalent to a tax invoice (Article 13 Paragraph 6 of the VAT Law);  and 
2. there is an interest compensation that should not be received by the Taxpayer. 

 
On the other hand, the Omnibus Law also eliminates two provisions related to the issuance of STP, as follows: 
 

1. a VAT-Registered Person reporting tax invoices that do not comply with the tax invoice issuance period; and 
2. a VAT-Registered Person failing to produce and has been given a VAT In refund. 

 
If there is an income tax underpayment based on the STP, including due to writing errors or miscalculations, the Taxpayer will be subject to an administrative sanction in the form of 5% interest divided by 12 for a maximum of 24 months. Previously, the applicable sanction was 2% fine per month. 
 
Especially for VAT-Registered Persons who do not or are late in issuing tax invoices, or issuing tax invoices that are incomplete, they are required to remit the tax payable plus a fine of 1% of the Tax Base (DPP) or lower than the original sanction of 2% of the DPP. 
 
The Omnibus Law also affirms that the issuance of an STP is not more than five years after the time the tax becomes payable or the end of the tax period, the part of the fiscal year, or the fiscal year.  However, there are exceptions to certain conditions, as follows: 
 

1. The STP is issued no later than the billing expiration if the amount of tax to be paid increases based on SKPKB, Additional Tax Underpayment Assessment Letter (SKPKBT), Revision Decision Letter, Objection Decision Letter, Appeal Decision, and Judicial Review Decision.
2. The STP for administrative sanctions is issued no later than five years after the date of Objection Decision Letter issuance if the Taxpayer does not file for an appeal. 
3. The STP for administrative sanctions is issued no later than five years after the date the Appeal Decision is pronounced by the Panel of Judges of Tax Court. 

Also, the Job Creation Law removes Article 15 paragraph (4) of the KUP Law, which previously regulated the issuance of SKPKBT imposing an additional interest penalty of 48% of the tax underpayment after five years since the Taxpayer is convicted. With the removal of the clause, the Director General of Taxes cannot issue the SKPKBT after the five-year period ends.  
 
Interest Compensation 
 
Taxpayers are also entitled to an interest compensation for the late refund of tax overpayments done by the authorities. If previously the interest rate was set at 2% per month, with the issuance of the Omnibus Law on Job Creation, the amount of interest compensation was adjusted to the benchmark interest rate divided by 12 for a maximum period of 24 months. 
 
However, the interest compensation will not be given if preliminary evidence audit of a tax crime is not followed by an investigation because the Taxpayers have voluntarily disclose their error on their own accord. 
 
If the objection, appeal, or judicial review is granted by the court and resulting in a tax overpayment, the Taxpayer is entitled to an interest compensation in the amount of the overpayment agreed in the closing conference. 
 
*Disclaimer: 
 
These provisions refer to the draft of the Job Creation Law the official text of which is still in the finalization process at the House of Representatives (DPR) Legislation Body. All new policies mentioned may still change considering that the Constitutional Court has opened the possibility of review for the Job Creation Law. 

Draft Sementara Undang-Undang Cipta Kerja