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Freddy Karyadi |
Luna Puspita |
In March 2016, the Indonesian Government disclosed its plan to optimise tax revenue from various uncollected taxes due on cross-border and online transactions involving the e-commerce business sector and certain individual taxpayers.
Further, the Ministry of Finance has unveiled its data relating to at least 6,000 Indonesian citizens having offshore accounts and around 2,000 foreign investment companies which are alleged to have engaged in illegal tax abuse by committing improper cross-border transfer pricing and by abusing tax holidays and tax incentives. The Indonesia Investment Coordinating Board (BKPM) may revoke the business licenses of such foreign invesment companies if the allegation is proven.
To follow up the Panama Papers, during April 2016, the government states it will first validate the information in the Panama Papers then match those records with its own data relating to alleged unreported assets and income of certain Indonesian individuals and corporations in order to find any room to improve tax revenue. The data pertaining to credit card transactions which are now transparent to the tax authority would also be used to boost the tax revenue. Further, other government agencies such as the anti-money laundering agency, the customs authority and the National drugs body would share their information with the tax authority to improve the tax authority's ability to analyse the tax revenue potency.
Simultaneously, according to the press, the tax authority indicates that Google, Yahoo, Facebook and Twitter in Indonesia have not fully complied with their tax obligation as they have only registered themselves as representative offices instead of as permanent establishments generating income from Indonesia. A representative office in Indonesia is not allowed to generate revenue in Indonesia. From the investigation conducted, it is alleged that the revenues obtained by Google, Yahoo, Facebook and Twitter in Indonesia are booked directly by their companies in Singapore. Aside from these four tech companies, a further 3,500 representative offices of foreign entities are also under scrutiny of the tax authority for similar reasons.
Freddy Karyadi (fkaryadi@abnrlaw.com) and Luna Puspita (lpuspita@abnrlaw.com), Jakarta
Ali Budiardjo, Nugroho, Reksodiputro, Counsellors at Law
Tel: +62 21 250 5125
Website: www.abnrlaw.com
