Disclosure of Incorrectness of Actions in Preliminary Investigations

JAKARTA, DDTCNews – The Directorate General of Taxes (DGT) plans to provide electronic channels for taxpayers related to the application of the ultimum remedium principle at the preliminary investigation stage. The plan was discussed by the national media today, Monday (12/12/2022).

Director of Law Enforcement of DGT Eka Sila Kusna Jaya said that the incorrectness of actions at the preliminary investigation stage must currently be disclosed in writing.

“Before coretax was implemented, [the disclosure of the incorrectness of actions] used the existing channels, either in person or by mail,” he claimed.

MoF Reg. 177/2022 already contains provisions on electronic submission. Pursuant to Article 20 paragraph (6) of MoF Reg. 177/2022, the disclosure of the incorrectness of actions in writing is submitted electronically through certain channels determined by the director general of taxes.

However, if electronic submission is not possible, the incorrectness of actions is disclosed directly to the head of the tax office where the taxpayers are registered or where the taxable objects are administered with a copy to the head of the law enforcement implementing unit.

Pursuant to the Law concerning General Provisions and Tax Procedures as amended by the Law concerning the Harmonisation of Tax Regulations, a preliminary investigation is carried out to obtain preliminary evidence of an alleged tax crime.

Pursuant to Article 8 paragraph (3) of the General Provisions and Tax Procedures Law as amended by the Harmonisation of Tax Regulations Law, even though a preliminary investigation has been carried out, taxpayers may voluntarily disclose in a written statement concerning the incorrectness of their actions.

The incorrectness of actions includes not filing Tax Returns or filing incorrect or incomplete Tax Returns or attaching incorrect information. The actions are in accordance with Article 38 or Article 39 paragraph (1) subparagraphs c and d of the General Provisions and Tax Procedures Law as amended by the Harmonisation of Tax Regulations Law.

According to Article 2 paragraph (4) of MoF Reg. 177/2022, a preliminary investigation is not followed up by an investigation if the taxpayers voluntarily disclose through a written statement the incorrectness of their actions and settle the tax underpayment as well as the administrative penalties.

In addition to the disclosure of the incorrectness of actions at the preliminary investigation stage, the request of the Coordinating Minister for Economic Affairs Airlangga Hartarto to the governors to provide motor vehicle tax incentives for electric vehicles is also reviewed.

Here’s the full news review.

Recovery of Losses to State Revenues

Taxpayers taking advantage of the application of the ultimum remedium principle at the preliminary investigation stage must submit the disclosure of the incorrectness of their actions in writing and sign it and cannot be authorised.

The taxpayers must also attach several documents. First, the calculation of the underpayment of tax payable. Second, the Tax Payment Slip or other administrative means equivalent to the Tax Payment Slip as proof of settlement of the underpayment of tax payable.

Third, the Tax Payment Slip or other administrative means equivalent to the Tax Payment Slip as proof of settlement of the administrative penalty in the form of a fine pursuant to the provisions under Article 8 paragraph (3a) of the General Provisions and Tax Procedures Law as amended by the Harmonisation of Tax Regulations Law.

“Payment of the amount of tax payable ... and payment of the administrative penalty in the form of a fine ... is a recovery of losses to state revenues,” reads a fragment of Article 20 paragraph (5) of MoF Reg. 177/2022. (DDTCNews)

Payment of the Disclosure of Incorrectness of Actions

Pursuant to Article 20 paragraph (8) of MoF Reg. 177/2022, the disclosure of the incorrectness of actions shall correspond to the actual circumstances if the amount of payment for the disclosure of the incorrectness of actions is equal to or greater than the amount of tax payable according to the results of the preliminary investigation.

“The disclosure of the incorrectness of actions that correspond to the actual circumstances ... notified to taxpayers subject to a public preliminary investigation,” reads a fragment of Article 20 paragraph (8) of MoF Reg. 177/2022. (DDTCNews)

Preliminary Investigation Period

Through MoF Reg. 177/2022, the authorities stipulate that preliminary investigations may only be carried out within a maximum period of 24 months, shorter than the former provision of 36 months.

Pursuant to Article 6 of MoF Reg. 177/2022, a public preliminary investigation is carried out within a maximum period of 12 months from the date of submission of the public preliminary investigation notification letter.

Next, a restricted preliminary investigation is carried out no later than 12 months from the date the preliminary investigation warrant is received by the auditors. If the preliminary investigation cannot be completed within the specified period, the auditors may apply for an extension for a maximum of 12 months. (DDTCNews/Bisnis Indonesia)

Motor Vehicle Tax on Electric Vehicles

Coordinating Minister for Economy Affairs Airlangga Hartarto stated that taxes are one of the factors that determine the competitiveness of the electric vehicle industry. In this case, Indonesia is unable to compete with Thailand, which has applied a 0% motor vehicle tax rate on electric vehicles.

“I urge some regions, perhaps Bali, Jakarta, this electrification [motor vehicle tax rate] to be reduced for us to be apple to apple with Thailand,” he said.

Airlangga claimed that the central government’s tax policies are relatively competitive compared to other countries, especially Thailand. For example, in terms of import duties and sales tax on luxury goods. (DDTCNews)

Tax Stamp Design

Through MoF Reg. 52/2020, the government regulates tax stamps as security documents as well as markings indicating excise settlement. Tax stamps have certain physical shapes, specifications and designs. To date, the government appoints the Money-printing Public Corporation of the Republic of Indonesia to print state security documents, including tax stamps.

The Money-printing Public Corporation of the Republic of Indonesia outlines that 2 types of tax stamps are managed by the Directorate General of Customs and Excise (DGCE), namely tobacco product tax stamps and beverages containing ethyl alcohol tax stamps.

The physical form of a tax stamp is in the form of paper that has the minimum security properties or elements in the form of security paper, security holograms and security printouts. Tobacco product tax stamps are provided in 3 series, namely series I, II and III. For beverages containing ethyl alcohol, only 1 series is provided. (DDTCNews) (kaw)