The Regulation of Tax Investigations in Gov. Reg. 50/2022

JAKARTA, DDTCNews – The government has issued Gov. Reg. 50/2022 as one of the implementing regulations for the General Provisions and Tax Procedures Law as amended by the Harmonisation of Tax Regulations Law. One of the regulated aspects pertains to investigations. The regulation under Gov. Reg. 50/2022 is discussed by the national media today, Thursday (15/12/2022).

Investigators conduct an investigation as stipulated under Article 44 of the General Provisions and Tax Procedures Law if a tax crime occurs and preliminary evidence is obtained. The preliminary evidence is sourced from a preliminary investigation, the handling of crimes that are immediately known or the development of an investigation.

“In conducting the investigation ..., investigators are authorised to summon witnesses or suspects for examination based on a valid summons,” reads a fragment of Article 60 paragraph (3) of Gov. Reg. 50/2022.

Witnesses or suspects are required to comply with the summons based on a valid summon. The summons is performed pursuant to statutory provisions on the code of criminal procedures. Further provisions on Article 60 of Gov. Reg. 50/2022 will be regulated in a minister of finance regulation (MoF Reg.).

In addition to some provisions on tax investigations under Gov. Reg. 50/2022, the issuance of Gov. Reg. 49/2022 which stipulates the provision of VAT facilities and Presidential Regulation 130/2022 concerning the 2023 State Budget are also reviewed.

Below is the full news review.

Identifications of the Suspect Without Prior Examination as a Witness

In respect of investigations, pursuant to Article 61 of Gov. Reg. 50/2022, a tax crime suspect may be identified without prior examination as a witness if the person concerned has been legally summoned 2 (two) times and is absent without giving proper and reasonable reasons.

“The identification as the suspect ... is based on 2 valid pieces of evidence,” reads a fragment of Article 61 paragraph (2) of Gov. Reg. 50/2022. Further provisions will be regulated in a MoF Reg. (DDTCNews/Kontan)

When the Suspect Does Not Comply with the Summons

Pursuant to Article 61 paragraph (3) of Gov. Reg. 50/2022, the examination of a tax crime suspect is not carried out if the person concerned has been legally summoned 2 times and is absent without giving proper and reasonable reasons.

“If the suspect does not comply with the summons ... , the exercise of rights and fulfilment of obligations as a suspect cannot be carried out by a power of attorney or legal adviser,” reads a fragment of Article 61 paragraph (4) of Gov. Reg. 50/2022.

If the suspect does not comply with the summons, the investigator undertakes 3 actions. First, announcing the summons in national and/or international media. Second, proposing the suspect to be included in the wanted list. Third, requesting assistance from the competent authority to be recorded in the red notice. (DDTCNews/Kontan)

Without the Presence of the Suspect

If investigation results are declared complete by the public prosecutor, the responsibility for the suspect and evidence from the investigators to the public prosecutor may be transferred without the presence of the suspect.

The provision applies if the suspect has been legally summoned and is absent without giving proper and reasonable reasons and the investigators have undertaken the abovementioned 3 actions. (DDTCNews)

Assistance from Other Law Enforcement Officials

In exercising the investigation authority as regulated under Article 44 paragraph (2) of the General Provisions and Tax Procedures Law, investigators may request assistance from other law enforcement officials. The assistance is in the form of technical support, tactical assistance, coercive assistance and/or consulting assistance in the context of investigation.

“Other law enforcement officials ... must provide assistance according to requests pursuant to statutory provisions,” reads a fragment of Article 61 paragraph (8) of Gov. Reg. 50/2022. Further provisions will be regulated in a MoF Reg. (DDTCNews)

Travel Bans

In the implementation of an investigation, pursuant to the provisions under Article 62 paragraph (1) of Gov. Reg. 50/2022, the minister of finance is authorised to issue a travel ban. The travel ban includes the travel ban, extension of the travel ban and repeal of the travel ban.

“The minister may delegate the authority to issue the travel ban... to the director general of taxes for and on behalf of the minister,” reads a fragment of Article 62 paragraph (2) of Gov. Reg. 50/2022. Further provisions will be regulated in a MoF Reg. (DDTCNews)

Termination of Investigations

Pursuant to Article 63 of Gov. Reg. 50/2022, for state revenue purposes, the general attorney may terminate an investigation within a maximum period of 6 months from the date of the request letter from the minister of finance.

In submitting the request for termination of the investigation, the minister of finance may delegate authority to the appointed officials. Upon a request to terminate the investigation from the minister or appointed officials, the general attorney may also delegate authority to the appointed officials.

The request from the minister of finance is only made after the taxpayer or suspect has settled losses to state revenues (Article 38 of the General Provisions and Tax Procedures Law) as well as the administrative penalty in the form of a fine of 1 time the losses to state revenues.

The request is also made after the taxpayer or suspect has settled the losses to state revenues (Article 39 of the General Provisions and Tax Procedures Law) plus the administrative penalty in the form of a fine of 3 times the losses to state revenue.

The request is also made after the taxpayer or suspect has settled the amount of tax in the tax invoice, withholding receipt and/or tax payment slip (Article 39A of the General Provisions and Tax Procedures Law) plus the administrative penalty in the form of a fine of 4 times the amount of tax in the tax invoice, withholding receipt and/or tax payment slip.

“The settlement ... is a recovery of losses to state revenues,” reads a fragment of Article 63 paragraph (4) of Gov. Reg. 50/2022. (DDTCNews)

Application of Administrative Penalties and Calculation of Losses to State Revenues

Pursuant to Article 63 paragraph (3) of Gov. Reg. 50/2022, the application of the administrative penalty in the form of a fine is regulated as follows. First, if the taxpayer or the suspect is alternatively punishable with more than 1 criminal penalty, the highest administrative penalty will be applied.

Secondly, if the taxpayer or the suspect is cumulatively punishable with more than 1 criminal penalty, administrative penalties will be applied cumulatively. The losses to state revenues and/or the amount of tax are calculated pursuant to the provisions under Article 44B paragraph (2) of the General Provisions and Tax Procedures Law. (DDTCNews)

The Integration Between the Population Database and the Tax Database

Gov. Reg. 50/2022 also details the mechanism for integrating the population database and the tax database mandated in Article 2 paragraph (10) of the General Provisions and Tax Procedures Law as amended by the Harmonisation of Tax Regulations Law.

Article 68 paragraph (3) of Gov. Reg. 50/2022 states that the Ministry of Home Affairs (Kemendagri) provides population data and user feedback data in the population database to the Ministry of Finance to be integrated with the tax database.

“Population Data is individual data and/or structured aggregate data as a result of population registration and civil registration activities,” reads Article 1 number 44 of Gov. Reg. 50/2022. See also ‘Gov. Reg. 50/2022 Also Regulates the Integration of Population and Taxation Data’. (DDTCNews/Bisnis Indonesia)

Evaluation of VAT Facilities

The government has issued Gov. Reg. 49/2022 related to VAT exemptions and VAT or VAT and STLGs non-collected. This Gov. Reg. is one of the implementing regulations of the VAT Law as amended by the Harmonisation of Tax Regulations Law.

Pursuant to Article 30 paragraph (1) Gov. Reg. 49/2022, VAT exemptions or VAT non-collected as regulated under this regulation are temporary or permanent. The facilities are evaluated by considering economic conditions and the impact on state revenues.

“Evaluation. .. is carried out by the minister [of finance],” reads a fragment of Article 30 paragraph (3) of Gov. Reg. 49/2022, quoted on Wednesday (12/14/2022).

Based on the results of the evaluation, imports and/or supplies of taxable goods or taxable services and/or utilisation of Taxable Services from outside the customs area may be subject to VAT pursuant to statutory tax provisions. (DDTCNews)

Tax Revenue Target

Presidential Regulation 130/2022 outlines details of the tax revenue target of IDR1,718 trillion in 2023, an increase of 16% from the target of IDR1,484.96 trillion. The largest contributor to the revenues will be Income Tax, followed by VAT or STLGs, land and building tax and other taxes.

In further detail, Income Tax revenue is set at IDR935.06 trillion or an increase of 15% from this year’s target of IDR813.68 trillion. The target consists of oil and gas Income Tax of IDR61.44 trillion and non-oil and gas Income Tax of IDR 873.62 trillion. In non-oil and gas Income Tax, Article 25/26 Income Tax of IDR349.93 trillion will be the largest contributor to the revenue target.

Further, VAT remittance is targeted at IDR742.95 trillion or an increase of 16% from this year’s target of IDR638.99 trillion. Next, Land and Building Tax remittance is targeted to reach IDR31.31 trillion, an increase of 50% from this year’s target of IDR20.9 trillion.

On the other hand, other tax revenues are targeted at IDR8.69 trillion or a decline of 24% from this year’s target of IDR11.38 trillion. (DDTCNews/Bisnis Indonesia) (kaw)