Should We Need The Tax Consultant?

There are various reasons most taxpayers have had for not using tax consultant services. However, the new tax regulations concerning proxy affirm that those taxpayers may not have a lot of choices now.

The existence of skillful staff in taxation area is one of the basic reasons why majority corporate taxpayers do not use tax consultant services . Using these services means extra money to pay their service fee. Having competent staff, taxpayers simply optimize their staff in performing their company ’ s tax rights and obligations.

What happens now when the Regulation of Finance Minister No.22/PMK.03/2008 and the Circular of Director General of Taxes No.SE-16/PJ./2008 have been issued? The above so called cost efficiency strategy will no longer be fully carried out. These two regulations clearly limit such opportunity.

Flexibility of ‘Small’ Taxpayers

Based on the Regulation of Finance Minister No. 22/PMK.03/2008, a proxy can be either a consultant or a non consultant. Included in the category of non consultant are permanent employees/staff. In other words, a permanent employee/staff can still receive an authority from the employer as taxpayer to perform the employer ’ s tax rights and/or obligations. However, according to this regulation issued on 06 February 2008, the taxpayers who can give such authority to their employees/staff are only those categorized as ‘ small ’ taxpayers. The criteria of ‘ small ’ taxpayers are:

1· Individual Taxpayers of non entrepreneur/non independent personal service provider ;

2· Individual Taxpayers of entrepreneur/independent personal services provider with maximum gross business turnover/revenue of IDR 1,8 Billion / year ; or

3· Corporate Taxpayers with maximum gross business turnover of IDR 2,4 Billion/year .

As further regulated in the Circular of Director General of Taxes No. SE-16/PJ./2008, the non consultant category including employees eligible for being appointed as a proxy should meet these requirements:

a. Owning a Tax Identification Number (NPWP);

b. Having filled the Annual Income Tax Return of the latest tax year ;

c. Owning tax competency certificate (brevet) /formal education certificate in taxation for a minimum of Diploma III degree, issued by a state university/private university with A accreditation; and

d. Obtaining a special proxy letter from the Taxpayer giving the authority .

Limitation of ‘Large’ Taxpayers

As previously mentioned , based on the Regulation of Finance Minister No. 22/PMK.03/2008, corporate taxpayers with gross business turnover more than IDR 2,4 Billion/year and individual taxpayers with gross business turnover/revenue more than IDR 1,8 Billion/year categorized as ‘ large’ taxpayers are not allowed to give a proxy to their employees/staff. However, pursuant to the issuance of the Circular of Director General of Taxes No. SE-16/PJ./2008 on 10 March 2008, such limitation is lessened.

The said Circular states that “ directors, commissioners and majority or controlling shareholders including employees of a Taxpayer who actually have the authority to make policies and/or decisions in running the company may perform tax rights and/or obligations of the said taxpayer without any special proxy letter ” . Thus, it can be concluded that employees/staff having the authority in a company of a large taxpayer may automatically perform the company’s tax rights and/or obligations. The question is, how about the rest of employees who do not have such authority?

The Circular stipulates that specifically for the tax rights and/or obligations performed, taxpayers are allowed to assign their employees in the following :

1. Signing tax documents such as Tax Invoices and/or Tax Payment Slips, only with an Appointment Letter and not necessarily a Special Proxy Letter;

2. Submitting tax documents through tax offices, without a Special Proxy Letter/an Appointment Letter; and

3. Delivering and/or receiving tax documents, other than those submitted through tax offices, without an Appointment Letter.

Upon this Circular’s provision, the intricacy occurs when due to some reason the authorized persons in the company could not perform the company’s tax rights ad/or obligations (other than those three activities in the points mentioned above), large taxpayers will have no other choice than to use tax consultant services. They will have to pay a tax consultant just for giving the signature in their monthly tax returns, for instance.

Moreover, another matter that forces the large taxpayers to use tax consultant services is related to unclear definition of ‘who actually have the authority to make policies and/or decisions in running the company may perform tax rights and/or obligations of the said’. In practice, some of tax officers require written evidence confirming that the said employee is an employee as accorded with the said provision. Without such evidence, they would not give approval of the taxpayer’s rights and/or obligations performed.

The most extreme thing occurs when the written evidence is already provided, certain tax officers are still unwilling to handle the process. They insist to handle it only if the authorized persons performing the tax rights and/or obligations are the Directors. What happen when the large taxpayers deal with such a tax officer and their directors are not be able to do the tax rights and/or obligations because of that? Once again, there is no other choice than to seek tax consultant’s assistance, for instance, to sign a monthly tax return.

Tips in Choosing Tax Consultants

The current condition really forces taxpayers to utilize tax consultant services. When this should be done, one thing for sure is being selective in choosing tax consultants. Legality, competency and ethics are the perfect combo to base the decision. In practice, there are a quite large number of tax consultants not having all of the criteria; few of them do not have even a single one.

Why Should Be Legalized?

The Regulation of Finance Minister No. 22/PMK.03/2008 and the Circular of Director General of Taxes No. SE-16/PJ./2008 are the answer to this question. Besides requiring a special proxy from the taxpayers giving the authority, these regulations stipulate that the tax consultants appointed should fulfill the following:

a. Owning a Tax Identification Number;

b. Having filled the Annual Income Tax Return of the latest tax year;

c. Owning Tax Consultant License from the Director General of Taxes on behalf of the Finance Minister

Therefore, choosing a person claiming as a tax consultant with no tax consultant license, is surely not a right choice.

Why Should Be Competent?

Competency is basically required in any field of work since in general it truly contributes to the success achieved in the future. In the tax field, competency for tax consultant level does not merely relate to comprehension of technical matters, it also involves multi perspective analytical skill.

In practice, a tax consultant with most excellent taxation expertise and tax analysis skill may not always succeed to fight for his argument in a dispute with the tax authority, whereas another tax consultant having less expertise and skill may have higher potential to win a dispute case. The main strategy above all of this is to view tax issues from different perspectives, not only from the taxpayer client and tax consultant perspectives. Understanding the tax officers’ perspective and their internal working procedure is one of the key element when finding best solution to the taxpayer clients. Certain tax consultants have such multi-perspectives due to their experience as they formerly worked in the same institution.

Why Should Be Ethical?

When tax consultants are reluctant to conform to the code of ethics in performing tax rights and/or obligation of their taxpayer clients, for instance, by not reporting the appropriate tax due or encouraging their clients to take unlawful actions over their tax cases, they actually cause losses either in terms of State tax revenue or even their taxpayer clients’ efficiency. Any misconduct done will potentially be detected in the future time.

Thus, using unethical tax consultants who do not utilize their own competency is absolutely not a smart choice. It will be only delaying problems, not solving them.

Sumber : MUC Highlight

Income Tax Exemption in Part of Income related with daily, weekly and other non-permanent

Minister of Finance Regulation No. 254/PMK.03/2008 dated on 31 December 2008

Income Tax for daily, weekly and other non-permanent employment would be exempted if:
Daily income received not more than Rp 150.000,00/person;
Daily Income received not more than Rp 1.320.000,00/month/person;

This Regulation would not be effective for income related with commission or fee payment to External Insurance Service Authorities and vendor.

This regulation would be effective in January 1, 2009.

Annual Return Acceptance and Processing Procedure

Directorate General of Taxation (DGT) Regulation No. PER-19/PJ/2009 dated on February 25th, 2009

1. This regulation would explain about Annual Return acceptance and processing procedure;

2. As an addition, this regulation also would like to explain about the requirement needed in order all Tax Payer Annual Return could be accepted at lodgment time by the Tax Office;

3. Further, this regulation also state the details and attachment needed in order the said Annual Return could be accepted as “Complete and Clear” Annual Return;

4. Tax payer has the obligation to deliver its annual tax return directly through:

a. Tax Office Integrated Service Place (TPT) in the tax payer domiciled tax office;
b. Tax Corner (Pojok Pajak);
c. Tax Vehicle (Mobil Pajak);
d. Nearest Tax Drop Box

5. Tax Payer also has the obligation to deliver its annual tax return indirectly through:

a. Nearest Post Office (The Post Office will give the Tax Payer a Receipt of Annual Tax Return delivery to the Tax Payer as an evidence or proof that the said Tax Payer has submit its annual tax return accordingly)
b. Appointed Shipping Service Company(The Company will give the Tax Payer a Receipt of Annual Tax Return delivery to the Tax Payer as an evidence or proof that the said Tax Payer has submit its annual tax return accordingly);
c. Appointed Courier Service Company(The Company will give the Tax Payer a Receipt of Annual Tax Return delivery to the Tax Payer as an evidence or proof that the said Tax Payer has submit its annual tax return accordingly);
d. ASP E-Filling Process.

Please note that the Tax Office will give the delivered Annual Tax Return or Electronic Annual Tax Return (e-SPT) an Annual Return Lodgment Receipt To the Tax Payer without any research process.

According to Article 6 of this regulation, the Tax Officers would conduct a research in a period of 2 (Two) Months after the Annual Return received. The period of research would take 14 (fourteen) working days for Over Payment Annual Return; Please be aware that the regulation also mention that based on the results of research as referred in this regulations, The Tax Office would deliver a notification letter that would state and explain that the delivered Annual Tax Return is incomplete and the Tax Payer has the obligation to deliver all the requested materials and attachment needed in 30 (Thirty) days to the Tax Office after the Completeness Annual Return Notification Letter Issued to the Tax Payer in order to Complete all the required and requested matters related with the incomplete Annual Tax Return; Further, if the Tax Payer fails to fulfill the requested materials by the tax office, then the tax office will deliver a notification letter that would inform the tax payer that the said Annual Return is not accepted as a complete Annual Return so because of the said matters the Tax Payers would be assume never submitted any Annual Return to the Tax Office. This regulation would be effective in March 1, 2009.

Moves by financial centres boost OECD fight against tax evasion

12/03/2009 - Moves by a number of financial centres over recent weeks in favour of transparency and exchange of information on tax matters have given a welcome boost to efforts to counter international tax evasion, OECD Secretary-General Angel Gurría said.

While many jurisdictions still maintain arrangements that prevent them from assisting foreign authorities in tax investigations, recent actions and statements consistent with the OECD standards in this area on the part of some show that real progress is being achieved.

Among other recent moves, Mr. Gurría noted:
Singapore has announced that it endorses the principles and standards for transparency and exchange of information agreed by a majority of OECD countries and several dozen non-OECD countries and territories and will introduce legislation by mid-2009 that will allow it to implement them.
Hong Kong, China, has announced that it will introduce a bill in mid-2009 to allow it to negotiate agreements implementing the OECD standard for effective exchange of information.
Andorra has announced its willingness to enter into tax information exchange agreements and its intention to eliminate strict bank secrecy for tax purposes by November 2009.
The Isle of Man has signed a tax information exchange agreement with Germany, raising to 13 the number of such pacts that it has with other economies.
Liechtenstein, which has already signed a tax information exchange agreement with the United States, has announced its acceptance of the OECD standards and its willingness to negotiate agreements that provide for effective exchange of information in all tax matters.
The Cayman Islands has announced that it will sign tax information exchange agreements with seven Nordic economies on 1 April, 2009, bringing to eight the number of such agreements that it has with other economies.
Altogether, since G-20 leaders signalled their determination at their summit in Washington last November to combat cross-border tax evasion, more than 20 bilateral tax information exchange agreements have been signed between different partners.

Mr. Gurría welcomed these developments, noting that “ending the abuse of banking secrecy arrangements that facilitate tax evasion is part of a broader drive to clean up one of the more controversial sides of a globalised economy.” He added that “the support of the G-20 for efforts to improve transparency and exchange of information has underscored their relevance for both developed and developing countries.”

Good access to information is a prerequisite for the effective and fair application of each country’s tax laws. The OECD standards in this area provide for an exchange of information between tax authorities on request in cases of specific inquiries into suspected tax evaders. They prohibit so-called “fishing expeditions” and are designed to protect the confidentiality of the information exchanged.

Source: www.oecd.org

Download: List of Tax Heaven Countries