Page 9 - Indonesia Taxation Quarterly Report (Q1-2020)

Executive Summary

Third, the time extension for the Presently, tax collections are targeted
implementation of rights and fulfillment to small ’pond’ of taxpayers, while there
of tax obligations. Fourth, the granting are still huge undetected economic
of authority to the minister of finance to activities performed by shadow
provide customs facilities in the form of economy. The DGT has certainly realized
exemptions or relief of import duties to that this state of condition should not
address the emergency conditions and hold longer. Instead of intensifying the
the recovery and strengthening of the effort to the existing taxpayer, the focus
national economy. has been shifted to the compliance
of unregistered individuals. With the
The government has also provided tax existing CRM and improved technology,
incentives outlined in the Minister of the administration framework can now
Finance Regulation No. 23/PMK.03/2020 be more accommodating the non-
concerning Tax Incentives for Taxpayers revenue interest, such as taxpayers’
Affected by the Coronavirus Outbreak trust, economic goals and social justice.
(MoF Reg No. 23/2020). Four incentives
are regulated in this rule. First, Article The CRM approach has been gradually
21 income tax incentives. Second, carried by DGT’s Small Tax Offices’ (KPP
Article 22 income tax incentives. Third, Pratama). In the beginning of March,
the deduction of Article 25 income tax DGT introduce new task and function of
installment incentives. Fourth, value KPP Pratama. One the additional task,
added tax (VAT) incentives. which is to collect and guarantee the
quality of taxation data and information
In terms of regional fiscal, there have in its domain based on statutory
been a discourse concerning the local regulations. The purpose of this changes
tax arrangements at Omnibus Law. is to improve the effectiveness of
The central government believes that supervisory performance and to extract
harmonization of regional tax rates tax potentials, thus broadening national
and regional user fees (Pajak Daerah tax base.
dan Retribusi Daerah/PDRD) will not
interfere with revenue. The Ministry of In performing the function, DGT will
Finance stated that the harmonization conduct supervision and audit using
of PDRD policies was intended so that different methods depending on the
there would be a standardization of the taxpayer segment. As such, the DGT
implementation of tax levies. has segmented taxpayers into two
groups, namely strategic taxpayers and
At the global level, there have been other taxpayers. This segmentation
discussions concerning tax measures is intended to formulate appropriate
that can be useful to tackle COVID-19 and effective supervision and audit
crisis. The OECD has offered suggestion methods. Further, this segmentation
on policy recommendations based is aimed at broadening the tax base
from tax relief measures that various and optimizing tax revenue through
governments have recently considered increasing compliance and extracting
or enacted. taxpayers’ potentials.

New Approach from Tax Under the CRM approach that has been
derived in the form of regulations, the
Office to Taxpayers Tax Office is expected to focus more
on taxpayers whose tax potentials have
Tax administration approach is one not been optimally explored and that
of the crucial factors in influencing have not carried out their tax obligations
taxpayers’ compliance. One of the efforts and are not registered in the DGT’s
to transform the tax administration administration system.
is through the Compliance Risk
Management (CRM). This risk-based The DGT also expects that tax officers
approach allows the government to will visit taxpayers more often and
apply different treatments to every ensure in advance that taxpayers can
taxpayer according to their compliance comply according to the tax law. In
risk profile. this regard, integrity, code of ethics

v