Regulation Update
No Imprisonment, Learn the New Tax Sanctions in the HPP Law!

Thursday, 14 October 2021

No Imprisonment, Learn the New Tax Sanctions in the HPP Law!

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.
 



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