june 2017 financial information access for tax purposes
TRANSCRIPT
Subject of the Reporter:
TAX UPDATE
Inside this issue:
Financial Information
Access for Tax Purpose
1-3
Modifications on the Rules
for Removal of Tax Adminis-
trative Sanctions
4
Do You Know 4
Greetings 5
June 2017
FINANCIAL INFORMATION ACCESS FOR TAX PURPOSES
The Automated Exchange of Financial Account Information between countries is an effort against the avoidance and evasion of taxes which occurs worldwide. The United States unilaterally established the FATCA (Foreign Account Tax Compliance Act) for its citizens who hide their assets abroad and, among other things, incited the G.20 Member States to agree to the implementation of the AEoI (Automatic Ex-change of Financial Account Information). Indonesia has decidedly joined together with 100 other coun-tries to apply this regulation for the disclosure of financial information, as one of the members of the G.20.
Based on the data received during the tax amnesty period, it is known that almost 25% of total assets de-clared by Indonesian citizens were kept overseas (Overseas Declaration and Repatriation). 58.6% of total assets were declared as financial assets. However, only 43% of all property declarations are repatriated assets.
As implementation of the international agreement/AEoI and for the purpose of domestic taxation, the Minister of Finance Regulation No. 70/PMK.03/2017 dated May 31, 2017, was enforced to regulate the subject, object, procedure and guarantee of confidentiality on the disclosure of financial information. A general overview of the contents of the Minister of Finance Regulation is given below:
Reporting Financial
Institution
1. Financial Service Institutions (Banking,
Insurance, Capital Market and Insurance under the supervision of the OJK)
Non-Reporting Financial
Institutions (Exclusively
Interna-tional)
1. Government enti-ties, international organizations or central banks
2. Specified pension funds
2. Other Financial Service Institutions
(besides the 3 sectors above, under the su-pervision of the OJK)
3. Exempted collective investment con-tracts
4. Specified trust funds
3. Other Entities (besides the 3 sectors above, outside the supervision of the OJK, such as saving and loan coopera-tives, futures brokers)
5. Other entities with low risk for the pur-pose of tax evasion
Delivery of Financial Information Domiciled in Indonesia & Outside Indonesia consists of:
Financial Information Access for Tax Purpose — continued
TAX UPDATE—Page 2
Delivery of
Financial
Information
Period of
information
delivered
Data Format
Mode of
Delivery
Data Elements Requested
Time Period of
Delivery
Automated
Financial
information for
1 Calendar Year
Electronic
1. Electronic
(online)
2. Non Elec-
tronic
(direct)
1. Identity of the Financial
Account Holder (name, ad-
dress, country of domicile
for tax purposes, TIN, place
and date of birth for Indi-
viduals, and controller iden-
tity for entities
Longest
delivery
period:
April 30/ year,
to DGT
August 1/year,
via OJK
2. Account Number (or other
forms that are equivalent to
an account number)
3. Identity of the Reporting
Financial Institution (name
and tax identification num-
ber)
4. The balance or value of the
Financial Account at the end
of the calendar year
(including cash value / sur-
render value for the annuity
contract or cash value insur-
ance contract); and
5. Income related to the finan-
cial account (example: inter-
est, dividend, other
amounts paid or credited to
the account)
By request
-
As requested
Direct
Delivery
As required by the DGT
1 month from
request letter
read more...
TAX UPDATE—Page 3
Financial Account Limitations required to be reported:
Consequences for financial institutions which do not comply with the requirements:
Financial Information Access for Tax Purpose — continued
For National Taxation
Purposes
Banking Sector
(Deposits)
Insurance Sector
(Policy)
Cooperative Sector
(Deposits)
Stock Market Sector
(Stock) and Commodity
Futures Trading
(Deposit Margin)
Owned by private
individuals, with an
aggregate value of
at least IDR 1 billion
coverage value of
at least
IDR 1 billion
with an aggregate
value of at least
IDR 1 billion
without an amount
limit
Owned by an entity,
without a minimum
balance limit
For AEoI Purposes
For financial accounts owned by entities and were opened before July 1, 2017, the compulsory reporting is for the aggregate of the balance in excess of USD250,000.
For financial accounts owned by entities which are opened after July 1, 2017: there will be no minimum balance limits
For financial accounts owned by a private individual: there will be no minimum balance limits
Violation
DGT Actions
Financial Institutions,
including leaders,
employees and other parties
which:
did not comply with the obligation of financial account identification procedure (international/exclusive to AEOI)
did not comply with the documen-tation required (international/exclusive to AEOI)
committed forgery of documents or omitted information required to be reported
1. Clarification
2. Written Reprimand
3. Investigation of Prelimi-
nary Evidence
4. Investigation
did not submit a financial informa-tion report
did not provide information/proof/explanation based on the request
1. Written Reprimand
2. Investigation of Prelimi-
nary Evidence
3. Investigation
Giving access to financial information is only for the benefit of taxation, not for other purposes. Taxpayers are ex-
pected not to worry because the Government has committed to keeping its confidentiality in accordance with the
provisions of international law and treaties (AEoI). All Tax Officers and Experts in the field of taxation are prohibited
from divulging, disseminating and/or informing unauthorized persons. Officials and Experts who violate this law shall
be punished with penalized and sentenced in accordance with Article 41 of the General Taxation Provisions and Pro-
cedures Law.
Legal Basis : Minister of Finance Regulation No. 70/PMK.03/2017 dated May 31, 2017 Minister of Finance Regulation No. 73/PMK.03/2017 dated June 12, 2017 Law No. 16/2000 dated August 2, 2000
(end)
1. There are 496 thousand bank accounts or 0.25% of all exist-ing accounts which are currently rated above IDR1 billion. The account owner's data must be reported by the bank to the DGT. (DGT Press Release No. 21/KLI/2017 dated June 7, 2017).
2. Hong Kong has signed an agreement with Indonesia in con-ducting the automatic exchange of financial account infor-mation for tax matters (AEoI) on June 16, 2017. The next country targeted to sign the AEoI with Indonesia will be Switzerland, Macao and Singapore, wherein many Indone-sian citizens deposit registered funds. With AEoI, financial information for tax purposes shall be easily obtained by the Directorate General of Taxes.
TAX UPDATE—Page 4
Administrative sanctions for late delivery of tax returns, tax return corrections and late tax payments or deposits, may now be reduced or eliminated by the DGT, either by an authorized personnel or through the Taxpayer's request. Provided that such administrative sanctions were given before January 1, 2015, and were paid by the Taxpayer prior to January 1, 2016. If the Tax Collection Letter (STP) has been issued, but the taxpayer has not filed a request for the reduc-tion/abolition of sanctions, then the DGT will write off the position without waiting for the taxpayer’s application. However, if the STP has not been published, then the elimination of sanctions can still be executed by the Director of Objections and Appeals by making minutes on the elimination of administra-tive sanctions. It is to be noted that these administrative sanctions which may be waived relate only to the late delivery of tax returns, late payment of tax or tax return corrections of their own accord, as long as the payment or remittance of the underpayment is done within 2015 or prior. It is notable that the Decree on the Reduction/Elimination of Administrative Sanctions by the regional office can now be done using electronic signature, to speed up the process of issuing the decree. Legal basis : Minister of Finance Regulation No. 66/PMK.03/2017 dated May 12, 2017 Minister of Finance Regulation No. 68/PMK.03/2017 dated May 12, 2017 Minister of Finance Regulation No. 29/PMK.03/2015 dated February 13, 2015 Minister of Finance Regulation No. 91/PMK.03/2015 dated April 30, 2015
MODIFICATIONS ON THE RULES FOR REMOVAL OF TAX ADMINISTRATIVE SANCTIONS
(end)
DISCLAIMER The information contained in this document is intended only to be a guide. It must not be relied on in, or applied to, specific situation without previously seeking proper professional advice. Even if all reasonable care has been taken in its preparation, PB Taxand do not accept any liability for any errors that it may contain or lack of update before being published, whether caused by negligence or otherwise, or for any losses, however caused, or sustained by any person. Description of, or refer-ence or access to, other publication within publication do not imply endorsement of them.
PBTaxand
@pbtaxand
www.pbtaxand.com
TAX UPDATE—Page 5
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