JAKARTA. The Directorate General of Taxation will intensify the audits on the taxpayers in in this year. Aside of facilitating and accelerating process of obtaining banking data, the tax authority will utilize transfer pricing documentation (TP Doc) to observe the tax compliance of some companies in Indonesia, mainly those that participated in tax amnesty.

The utilization of TP Doc in investigating the corporate taxpayers comes with the obligation of domestic and overseas companies, which conduct affiliated transactions, to arrange and submit the TP Docs to the tax authority no later than April 2017.

Chief of International Taxation Dispute Prevention and Management Achmad Amin said, the Country by Country Reports (CbCRs) and the master files can be the sources of information for the tax authority in conducting audit.

“Therefore, the companies have to be careful in arranging the asset declaration letter,” Achmad told KONTAN this week. This warning is addressed more to the companies, which have participated in tax amnesty but have not yet reported all of their assets and investments in their asset declaration letters.

Should the tax authority find unreported assets and investments in the CbCRs and in the master files, the taxpayers will be imposed sanctions as stipulated under the Law No 18 on Tax Amnesty. If the taxpayers fail to clarify the finding, the unreported assets will be considered as additional assets and be imposed with income tax, plus a sanction of 200% of unpaid income tax.

“Transparency is the main principle of tax amnesty and TP Doc (submission),” he said.

Director of International Taxation at Directorate General of Taxataion Poltak Maruli John Hutagaol said, a TP Doc, which consists of local file, master file, and CbC Report, actually reflects the price formation of the special relations transactions with the parent entity or other entities within the same group. “Therefore, that (the TP Doc) should reflect the principles of arm’s length price,” he said, Friday (17/2).

The TP Doc in the forms of master file and local file will be presented by the taxpayers when submitting the 2016 annual notification letter by the end of April 2017. Furthermore, the taxpayers are subject to present the CbCRs no later than December 2017.

“The (submission) of CbCR is only mandatory for a parent company, with the total turnouts of more than Rp 11 trillion. Therefore, (a company with) the total turnouts of less than that number (Rp 11 trillion) is not required to (submit the CbCR),” John said.

Furthermore, foreign investment companies operating in Indonesia are also required to prepare CbCR documents. Executive Director of Center for Indonesia Taxation Analysis (CITA) Yustinus Prastowo estimates, the requirement of submitting TP Doc can be integrated with the tax amnesty program.

“The unreported assets or investments may be treated with the Law No 18 on Tax Amnesty, as long as they were obtained in and before 2015,” he said. (Muhammad Farid/Translator)

 

Editor: Sanny Cicilia