No Imprisonment, Learn the New Tax Sanctions in the HPP Law!
Thursday, 14 October 2021
The Harmonized Tax Law (UU HPP) abolishes imprisonment sanctions and eases administrative sanctions in the law enforcement process.
The reason is to uphold justice and provide legal certainty for taxpayers.
Criminal Tax Sanctions
In the context of tax crimes, the law enforcement process will prioritize the recovery of state revenue losses. This is confirmed by the abolition of the provision for imprisonment in the Law on Taxation General Provision and Procedure (KUP Law).
In essence, taxpayers are given the opportunity to recover state revenue losses by paying tax principal and sanctions, as a consideration for being prosecuted without being sentenced to imprisonment.
In addition to eliminating imprisonment, the HPP Law also changes the amount of sanctions that must be paid by tax criminals.
| Tax Crime | Old Sanctions (KUP Law) | New Sanctions (Income Tax Law) |
| Negligence | Tax Principal + penalty 300% | Tax Principal + penalty 100% |
| Intentional Disregard | Tax Principal + penalty 300% | Tax Principal + penalty 300% |
| Fictitious tax invoice/ tax withholding slip | Tax Principal + penalty 300% | Tax Principal + penalty 400% |
Sanctions During Audit
To provide justice and legal certainty, the amount of sanctions at the time of the examination is reduced. Especially for taxpayers who do not submit a Tax Return (SPT) or do not make bookkeeping.
| Description |
Old Sanctions (KUP Law) |
New Sanctions (HPP Law) |
| Underpaid income tax | 50% | interest per month at the benchmark rate plus uplift factor 20% (max 24 months) |
| Underwithheld income tax | 100% | interest per month at the benchmark rate plus uplift factor 20% (max 24 months) |
| Income tax withheld but not paid | 100% | 75% |
| Underpaid VAT and STLG | 100% | 75% |
Sanctions During Legal Effort
Similarly, with the amount of sanctions at the time of legal efforts, the HPP Law forces the government to be more lenient towards taxpayers.
In this case, the sanction is after legal efforts if the court's decision strengthens the provisions of the DGT.
