Indonesian Tax Research Articles

Article: Resolving Conflicts Between Production Sharing Contracts and Tax Treaties in Indonesia

This article discusses the uncertain dispute settlement for a conflict resulting from applying a reduced rate stipulated in a tax treaty or a domestic withholding tax rate agreed to in a production sharing contract (PSC) on branch profit tax (BPT) in Indonesia. The contractor, the permanent establishment of a non-resident entity in Indonesia, interpreted that a reduced rate shall apply whereas the Indonesian tax authority adhered to applying the prevailing domestic withholding tax rate at the time that the PSC was signed. The ambiguousness between the tax treaty and the PSC led the disputed entity to choose litigation as the primary alternative of dispute settlement even though the tax treaty facilitates resolving the problem through a mutual agreement procedure (MAP) or another possible dispute resolution. Further, Indonesian civil law does not implement the jurisprudence. The dispute will continue if renegotiation is not reached. To reduce the chance of a potential dispute in the future, a stabilization clause to accommodate the change of the regulation during the period of the contract has been included, however, it only applies to the latest version of the PSC. Tax treaty, production sharing contract, branch profit tax

Analisis Kesiapan Implementasi Pajak Karbon di Indonesia

This research aims to analyze the government's readiness to implement carbon tax in Indonesia based on Law no. 7 of 2021. This analysis uses variables: Policy standards and targets, resources, characteristics of implementing organizations, communication between organizations, attitudes of implementers, social, economic and political environment. The method used is descriptive qualitative. The sample for this research is an analyst at the Fiscal Policy Agency of the Ministry of Finance of the Republic of Indonesia. The sample was carried out using the purposive sampling method. Data collection techniques use observation, interviews and documentation. Data analysts use the inductive data analysis method, which is a general analysis method carried out by researchers which is based on the results of field research such as interviews, then interpretation is carried out, meaning is sought and conclusions are drawn (verbatim analysis). The research results show that the government's readiness is quite good with the existence of Law no. 7 of 2021 and Presidential Decree no. 98 of 2021, and the Ministry of Finance is currently preparing implementing regulations for this law and is waiting for it to be ratified by the legislature (DPR).

MENELISIK SATU DEKADE RISET PERPAJAKAN PARIWISATA di INDONESIA : SEBUAH STUDI BIBLIOGRAPHY

This study aims to examine and determine the development of tourism tax research in Indonesia for a decade with an observation period of 2013- 2023. The research is based on 83 tourism tax articles published in reputable journals or SINTA 1,2,3 and 4 accredited journals in Indonesia. This study found that the development of tourism tax research did not consistently increase and the lack of research on tourism tax as evidenced from 10 yearsthere were only 83 articles. The journal that publishes many articles with the most tourism tax topics is the Udayana University Accounting E-Journal. The method that is widely used is quantitative method, and secondary data sources are widely used by researchers. The absence of articles published in SINTA 1indexed journals is mostly published in SINTA 4 indexed journals. This study proves the development of tourism tax in Indonesia with a bibliography analysis method that has not been studied by researchers in Indonesia bymapping articles published in SINTA 1,2,3 and 4 indexed journals for a decade. This research also uses 4 keywords in the search for tourism tax articles, namely entertainment tax, hotel tax and tourism tax

Property Tax in Indonesia: A Proposal for Increasing Land and Building Tax Revenue Using the System Dynamics Simulation Method

The current hottest issue in Indonesia is the small amount of Land and Building Tax (LBT) revenue at the national and local levels. This research aims to find a valuable model for increasing LBT revenue for the government by formulating ideal clauses and determining what policies should be implemented. This research aims to reveal the practice of tax avoidance and evasion on LBT tax objects, which causes LBT income to stagnate yearly, and find a solution by mapping actual conditions and forecasting the next ten years using a system dynamics model. The research question is why LBT makes a small contribution to total state revenue, even though the object and what are the solutions to increase LBT income in the future. The research methodology uses quantitative methods supported by qualitative analysis using dynamical system modeling. This modeling makes it possible to predict increases in tax revenues by considering several variables that cause LBT revenues to stagnate. The findings of this study show that LBT revenues will proliferate compared to revenues in the initial year of the simulation if intervention is carried out by reducing tax avoidance and tax evasion, increasing tax compliance, and the value of the income growth ratio per tax object. This study found nine actors essential in increasing property taxes in Indonesia: civil officials, tax officials, tax authorities, notaries, large companies, state and regional-owned enterprises, sellers, and buyers of property. In conclusion, the government needs to improve the tax collection system and implement various strategies, including increasing the role of notaries to prevent tax evasion in housing.

Notes on Tax Disputes from Misapplication of Indonesia-Japan Tax Treaty: A Study Based on Indonesian Tax Court Decisions

This study aims to examine the legal, economic, and political aspects of Indonesia-Japan tax treaty. Next, it examines tax disputes brought to the Indonesian tax court due to the misapplication of Indonesia-Japan tax treaty. It digests the Indonesia tax court decisions stipulated during Fiscal Year 2015–2021. The Indonesia-Japan tax treaty has existed for more than 30 years to allocate the taxing rights of the two countries. Japanese business has invested in Indonesia through the establishment of subsidiaries. The disputes occurred due to, in the first case, the interpretation regarding whether a business entity or an individual is a party that can be categorized as a tax subject in accordance with the Indonesian and Japanese tax treaties. Second, is the issue of the definition, classification, and characteristics of income that result in differences in tax treatment. Third, we find that the tax rates used for income withheld or collected because of income classification. Finally, the disputes also occurred due to the fulfilment of administrative issues which has been taken most proportion of the disputes. Therefore, both parties in a dispute need to have a similar understanding on how the agreed tax treaty applies to the dynamic of business. tax treaty, tax dispute, international tax law

Digital Tax Regulation in Facing Society 5.0 Era to Realize Indonesian Tax Sovereignty

Technological advancements have catalyzed the emergence of the digital economy, where digital platforms, leveraging internet access, can penetrate multiple regions and accrue substantial profits unrestricted by national jurisdictions. This scenario presents advantages and convenience but simultaneously challenges a country's tax sovereignty. The traditional tax system, predicated on a company's physical presence for tax liability, finds itself ill-equipped to handle the digital domain's nuances. This research seeks to explore the potential and hurdles in implementing digital taxes in Indonesia, delving into the government's regulatory efforts within the framework of Society 5.0. From an academic standpoint, digital taxes illustrate the disruption in tax collection due to the absence of a tangible company presence. Thus, this study also aims to investigate the determination of tax sovereignty in the context of digital taxation, aspiring to enrich scholarly discourse. Employing a normative juridical approach, this study scrutinizes legal norms and rules while considering empirical facts from the field. The findings indicate that while the introduction of digital taxes in Indonesia holds significant promise and faces considerable challenges, governmental action to update and streamline digital tax regulations is imperative. Furthermore, the principles underlying digital tax proposals, such as Pillar One, require reinforcement to enhance their effective implementation.

UNRAVELING THE EFFECTS OF TRANSFER PRICING DOCUMENTATION REGULATION: INDONESIA’ EVIDENCE

To counter tax avoidance using transfer mispricing practices, Indonesia introduced a transfer pricing documentation policy. This policy requires taxpayers to be transparent with their transfer pricing decisions. Treating the implementation of this policy as a shock to the taxpayers, this paper examines how the transfer pricing documentation policy affects a firm's tax avoidance behaviour by employing regression discontinuity design and difference-in-difference. Immediately after introducing the policy, a regression discontinuity analysis results indicate a 0.9 percentage point increase in tax/sales among taxpayers obligated to prepare transfer pricing documentation. A 0.3 to 0.7 percentage point increase in the tax/sales of the treatment group is observed when difference-in-difference is established. These findings show that such policy implementation can discourage taxpayers' tax avoidance behaviour. In light of these results, the Indonesian tax authority may consider taking several actions to improve the implementation of TP docs, such as amending summary of TP docs so that it contains more valuable information regarding taxpayer’s arm’s length principle application, requiring simple TP docs for taxpayers below the threshold, providing continuously providing assistance and capacity building to the taxpayers regarding appropriate TP docs preparation and arm’s length principle application.

Ada Apa dengan Tax Avoidance di Indonesia?

The purpose of this study is to identify, assess and provide interpretation of the results of the condition of tax avoidance in Indonesia and the potential - the potential behind the occurrence of tax avoidance or tax avoidance in Indonesia. The method used in this research is a qualitative meta-analysis method of several findings related to tax avoidance. The process of analysis with meta-analysis is carried out with the stages of formulating research problems, exploration, data search, determining appropriate data, and controlling quality. The results showed that the potential managerial and operational conditions of the company, the characteristics of the company and the inequality of the system and performance and Indonesian tax law are potentials that can make the continuation of the phenomenon of tax avoidance in Indonesia. The synergy of managerial improvement by the company, supervision of company characteristics, improvement of systems, laws and performance, by the government and equality of views between taxpayer actors and the government are things that must be done to suppress the phenomenon of tax avoidance in Indonesia.

Conflict of interests in declaring state/regional loss of tax income in Indonesia

Empirical and juridical gaps exist in fulfilling the element of loss in state/regional (of income) as referred to in the law in Indonesia. This study aims to address two existing issues. First, to point out the illegal practices by DJP in declaring losses to state/regional (of income) in Indonesia's taxation field. Second, to suggest or offer a legal concept regarding the competent agency's constitutional authority in declaring losses to the state/regional (of income) in Indonesia's taxation field. Two conclusions are drawn based on a normative legal study using the theory of checks and balances. First, the calculation of losses on state/regional (of income) in the field of taxation does not comply with the mandate of the constitution, namely independent, accountable, and transparent because there are no applicable tax laws and regulations to regulate procedures and experts who calculate losses on state/regional (of income) areas in the field of taxation in Indonesia. Second, because losses to the state/regional (income) in the field of taxation are part of state finances, and to align with the principle of checks and balances, the constitutional authority of the competent agency in declaring it is The Audit Board of the Republic of Indonesia (BPK). Therefore, referring to BPK's authority to declare losses in state/regional (income) in Indonesian taxation is recommended.

THE INFLUENCE OF TAX PAYMENT AWARENESS AND UNDERSTANDING OF TAX REGULATIONS ON THE LEVEL OF LAND AND BUILDING TAX REVENUE AT THE REVENUE DEPARTMENT AND MANAGEMENT SURABAYA CITY FINANCE

In financing regional development, tax is an alternative source of financing needed by the government, including land and building tax. Land and Building Tax is the only property tax in Indonesia and has increased from year to year. Apart from that, Land and Building Tax has the largest number of taxpayers compared to other taxes. Even though Land and Building Tax has a broad impact, the proceeds from Land and Building Tax are returned to the regions concerned for the implementation and improvement of development in their respective regions. The aim of this research is to determine the influence of the level of awareness of tax payments and understanding of tax regulations for individual taxpayers, both partially and simultaneously, on land and building tax revenues in the work area of ​​the Rungkut Kidul Subdistrict Office. The population is all effective taxpayers registered in the working area of ​​the Rungkut Kidul Subdistrict Office. The sample used was 95 individual taxpayers for land and building tax. The sampling technique used purposive sampling, namely random sampling of 95 respondents. The analysis technique used is multiple linear regression.

Content Analysis of Indonesian Tax Court Rulings: Aggresiveness of Transfer Pricing and Tax Avoidance

This research aims to examine the influence of effective tax rates, the existence of transactions with Tax Haven countries, and the aggressiveness of transfer pricing on tax avoidance. This research observed 115 public and private companies in all areas of the Indonesian Tax Authority whose tax disputes over transfer pricing cases had been decided by the Indonesian Tax Court for the 2017-2022 period. This research was carried out using a quantitative approach with cross section data which was then analyzed using multiple regression analysis using the Eviews 12 application. The secondary data for this research came from Financial Reports, Court Decisions and Tax Annual Corporate Reports which had received approval from the Directorate General of Taxes and used initials so as to avoid violations of official secrets. The results of this study indicate that the effective tax rate has an influence but is not significant on tax avoidance. This shows that the effective tax rate or large tax burden of companies, most of which are foreign owned, has not been able to encourage these companies to avoid tax. On the other hand, the existence of transactions with Tax Haven countries and the aggressiveness of transfer pricing have a positive and significant effect on corporate tax avoidance. These results indicate that there are transactions with affiliates in Tax Haven countries and the more aggressive the company is in its transfer pricing policy, it indicates that there is a strong motive to avoid tax.

Tantangan dan Faktor yang Mempengaruhi Penundaan Implementasi Pajak Karbon di Indonesia

This research analyzes the challenges and factors influencing the delayed implementation of carbon tax in Indonesia using a qualitative descriptive approach through literature review and document analysis. The research findings indicate that the challenges and factors affecting the delay in carbon tax implementation can be seen from various aspects. This study has shown that the challenges in the carbon tax implementation process include the balance between environmental goals and economic well-being, public awareness and acceptance, infrastructure readiness and emission monitoring, as well as weak law enforcement in carbon tax policy determination. Various factors influencing the delay in carbon tax implementation include dependence on fossil energy sources, resistance from affected industries, the absence of a carbon tax roadmap, and unclear carbon exposure thresholds. With this research, it is hoped to provide an in-depth understanding of Indonesia's unique challenges in addressing climate change and offer insights needed to design effective policies for reducing carbon emissions and achieving environmental protection goals while considering existing socio-economic impacts.

Application of Income Tax on Foreign Workers in Indonesia

The presence of foreign workers working in Indonesia creates rights and obligations for the foreign workers themselves. These rights and obligations are regulated by the laws and regulations in force in Indonesia, including rules relating to taxation. Foreign workers who are in Indonesia can become tax law subjects in Indonesia, so that their rights and obligations in the field of taxation apply. In order for legal regulations in the field of taxation to be implemented properly, efforts are needed to apply income tax laws to foreign workers who work in Indonesia. This paper discusses the legal basis for the imposition of income tax for foreign workers in Indonesia and the forms of accountability for violators of income tax arrangements for foreign workers in Indonesia. Based on this writing, foreign workers are a subject of income tax in Indonesia and can be subject to domestic tax or foreign tax subject. The determination is based on how long they have been in Indonesia, because they get income for what they do in Indonesia. Meanwhile, if there is an abuse related to income tax against foreign workers, in this case the tax deduction is carried out by the company where the foreign worker works, then the person who gets the sanction for the occurrence of the fraud is the party who withheld the income tax.

Indonesian Tax Law Reform to Encourage Sustainable Economic Growth

Indonesia's state tax functions as a means of collecting state revenue, also known as the budget, and has a regulatory function. MSMEs are key tools to achieve the Sustainable Development Goals. It is considered an economic engine used as the main tool to reduce poverty through promoting sustainable development projects. The success of MSMEs in growing the national economy is evident in their financial performance reports. The research methodology presented in this article uses an interpretive analysis of the concepts presented in this article by applying a three-dimensional model to discuss tax reform. The result of this study is that the lower the level of tax incentives granted, the better the financial performance of MSMEs. The existence of tax incentives for MSMEs improves financial performance in the form of net realized profits. Tax incentives are a form of tax reduction in the form of reduced tax rates for taxpayers who meet certain conditions to minimize the tax burden.

Potential Carbon Tax in Indonesia: A Literature Review

Potential Carbon Tax in Indonesia: A Literature Review

Analysis of Tax Service Quality and Taxpayer Satisfaction During the Covid-19 Pandemic at the Pratama Tax Office Cileungsi, Bogor, West Java, Indonesia

Service is the effort to achieve public service quality for taxpayers, all services are provided through Integrated Service Centers (ISC) at each Tax Service Office (TSO) and at Tax Service, Counseling, and Consultation Offices (TSCTCO) throughout Indonesia's tax areas, and taxpayers' satisfaction with the services provided by KPP Pratama Cileungsi, as well as the initiatives undertaken and planned by KPP Pratama Cileungsi to improve service quality during the Covid-19 pandemic. This study identified several issues: 1) Taxpayer satisfaction with tax services at the Tax Service Office KPP Pratama Cileungsi during the Covid-19 pandemic, 2) Efforts made by the Tax Service Office KPP Pratama Cileungsi to enhance the quality of tax services during the Covid-19 pandemic. The research method employed a descriptive qualitative approach conducted in a natural setting, with data collected using interview guidelines and documentation. The research informants included strategic taxpayers, tax volunteers, and employees of KPP Pratama Cileungsi. Data analysis encompassed activities such as data reduction, presentation, and drawing conclusions/verification. The results of this study revealed that tax class activities are part of cooperation with the district government to ensure that the public is aware of and utilizes these tax classes as a means of learning and increasing tax obligation awareness. Creating or re-sharing tax education content through a dedicated YouTube channel serves as a contemporary education platform with easy access anytime and anywhere for taxpayers, given the extensive jurisdiction of KPP Pratama Cileungsi. This YouTube channel should be promoted through village government devices to be known by the wider community, especially in the jurisdiction area of KPP Pratama Cileungsi.

Reflection of Al-Ghazali’s business ethics for tax consultants

Purpose - The purpose of this study was to explore the application of the values of Al-Ghazali Islamic business ethics to tax consultants in Indonesia and to compare them with the Indonesian Tax Consultant Professional Code of Ethics.Method - This research approach uses phenomenology. There were 3 informants interviewed in the study consisting of tax consultants who are Muslim in Indonesia, fiscal authorities who are Muslim in Indonesia, and experts in the Islamic religion.Result - This research gives the result that the principle of integrity can be expanded in terms of its definition and meaning with the mujahadah component in Al-Mizan, so that the integrity referred to here is trying to keep away bad traits that are prohibited in Islam. Moreover, on the concept of al ihya', tax consultants have a main orientation to profit and the motivation to help taxpayers is still limited to improving the image of their consulting services business.Implication - The concept of Islamic Business Ethics by Al-Ghazali is a broader and deeper ethic so it is very appropriate if it is adapted to the Indonesian Tax Consultant Code of Ethics, especially regarding responsibility and motivation as servants of God.Originality - This research is the first study that used a phenomenological approach in uncovering the reflection of the concept of Islamic business ethics by Al-Ghazali on the implementation of a tax consultant's code of ethics.

The Influence of the Directors Boaards and Operational Profit and Loss on Tax Avoidance (Empirical Study of Sub-Oil and Natural Gas Companies Listed on the Indonesia Stock Exchange 2017-2022)

The phenomenon of taxation in Indonesia is Indonesia's low tax ratio in 2021 which is recorded at only 9.11%, a low tax ratio indicates a high level of tax avoidance in a country. This study aims to determine the influence of the Board of Directors and Operational Profit and Loss on Tax Avoidance. Tax avoidance in this study is measured by the Cash Effective Tax Rate. This study used a sample of oil and gas companies listed on the Indonesia Stock Exchange during 2017 – 2022 using a purposive sampling method. The analytical method used is quantitative descriptive analysis. The results of this study indicate that the proxy for the board of directors, operational profit and loss has no effect on tax avoidance

The advocacy coalition of sugar-sweetened beverage taxes in Indonesia

The Ministry of Finance of Indonesia has put sugar-sweetened beverages (SSBs) taxation on its agenda since 2020 to address the need for health financing, as outlined in the National Medium-Term...

IMPLICATIONS OF THE IMPLEMENTATION OF THE TAX ADMINISTRATIVE SANCTIONS POLICY ON TAXPAYER COMPLIANCE

<p>General provisions on taxation in Indonesia have regulated tax administration sanctions. The regulation and application of tax administration sanctions is expected to encourage taxpayer compliance. Through taxpayer compliance, tax revenue can reach the target on an ongoing basis. However, in reality, tax revenues in Indonesia tend to never reach the target. This is due to the still weak taxpayer compliance. Departing from this situation, this study examines the regulation of tax administration sanctions and their effectiveness in increasing taxpayer compliance. This research is a juridical-normative research. Data was collected through a study of documents originating from legal materials, both primary, secondary and tertiary. The research finding is that changes to the provisions on tax administration sanctions based on Law Number 7 of 2021 concerning Harmonization of Tax Regulations can encourage taxpayer compliance because these changes are marked by a reduction in sanctions that are not burdensome to taxpayers and are better able to reflect proportionality, convenience, and fairness compared to provisions previously. However, the application of tax administration sanctions in encouraging tax compliance still faces obstacles, namely that there is no adequate infrastructure in supervising and examining all taxpayers who commit tax non-compliance, the quantity and quality of tax officials in supervising and examining taxpayers, and the attitude of taxpayers who commit tax avoidance rather than fulfilling tax obligations.</p>