Articles for Amnesty

THE discussion for the bill on the General Provisions of Taxation Procedures Law, or the KUP Bill for short, has not started. However, there are reports that the tax amnesty program arrangement will be in the revised draft. It triggered criticism from within the House of Representative (DPR) and outside the parliament complex.

Until the end of last week, DPR Deputy Speaker from the Greater Indonesia Movement Party (Gerindra) Faction, Sufmi Dasco Ahmad, was still unable to make sure when the plenary meeting, for the purpose of approving the start of the deliberation of the KUP Bill at the commission, would start. The same with the Commission XI Chair Dito Ganinduto, who said that the commission had not been appointed to discuss the KUP Bill. “We are just about to discuss it at the DPR. Probably next week,” said Sufmi on Friday, May 28.

Revision to Law No. 6/1983 was actually initiated six years ago. The law that covers all regulations on taxes and customs was last revised in 2009. However, the plan to have a DPR discussion on the fifth amendment has repeatedly failed, even though it has been included in the 2015-2019 National Legislation Program.

Employees serving taxpayers reporting their Annual Tax Returns (SPT) at a tax office in Kebayoran Baru, Jakarta, in March. Antara/Muhammad Adimaja


As of late, this old discourse has resurfaced. The DPR’s plenary meeting on March 23 agreed to include the KUP Bill in the 2021 Priority National Legislation Program. The decision was made exactly two weeks after the government, through Justice and Human Rights Minister Yasonna Hamonangan Laoly, proposed to the DPR Legislation Body to have the bill immediately discussed this year.

However, a new problem emerged on May 19. During an online gathering with the media, Coordinating Minister for the Economy Airlangga Hartarto said that the KUP Bill discussion would include plans on tax amnesty. Airlangga’s statement confirmed rumors about a second phase of the tax amnesty program, which started early this year.

The discourse immediately caused controversies. Not only was it never mentioned in the initial talks on the preparation of the KUP Bill, the new article on tax amnesty reportedly was not proposed by the ministry of finance, the department in charge of state revenues. 


THE draft new article on tax amnesty is wedged in between Article 37A and Article 38 of the General Provisions of Taxation Procedures Law. In the current law, articles 36 and 37 regulate the reduction and removal of administrative sanctions. The KUP Bill added articles 37B to 37I.

In the new articles, the KUP Bill regulates the scheme for disclosing net assets that has not been reported by taxpayers. The assets are categorized as two, depending on the period of which they were obtained, which are from January 1, 1985, to December 31, 2015, and from January 1, 2016, to December 31, 2019. The period for filing the reporting assets is set for July 1 to December 31. This means that the KUP Bill must be passed before that.

The KUP Bill stated that the taxpayer must report its assets in the form of a statement letter. Net assets that they reported will be subjected to income tax, which is final. If placed in a government securities instrument, at least within five years, the rate imposed is 12.5 percent. Otherwise, the assets would be subject to a rate of 15 percent. In exchange, taxpayers who have disclosed their assets to the directorate-general of taxes will not be subject to administrative sanctions.

Five years ago, a similar scheme for declaring assets was carried out by the directorate-general of taxes, following the issuance of Law No. 11/2016 on tax amnesty. Several new articles in the KUP Bill also mention the Tax Amnesty Law as a reference. One way to report and declare assets is by submitting a statement letter to the directorate-general of taxes.

The difference is, the first phase of tax amnesty, which was from July 2016 to March 2017, determined a smaller amount of redemption money—depending on the reporting period. At the time, the law also regulated the amount of redemption money for micro, small and medium enterprises.

Minister Airlangga Hartarto was not the only member of the cabinet who supported the agenda to rearrange the tax amnesty program. A government official with knowledge of the preparation of the KUP Bill said that Airlangga and the National Development Planning Minister/National Development Planning Agency Chair, Suharso Monoarfa, both conveyed their ideas about tax amnesty program to President Joko Widodo. The Golkar Party chairman and the United Development Party (PPP) chairman, respectively, did so to relay messages from entrepreneurs.

Since 2019, a number of entrepreneurs have been more aggressive in voicing out the discourse to follow-up on the tax amnesty program. When moderating the “Kadin Talk” discussion at the Kadin Tower in Jakarta, August 2 2019, Indonesian Chamber of Commerce and Industry (Kadin) Chair Rosan Perkasa Roeslani had asked Finance Minister Sri Mulyani Indrawati about tax amnesty. “Pardon me, Mam, is it possible to have another tax amnesty (program)? In other nations, (the program) is held two to three times,” Rosan asked Sri Mulyani, who was acting as a guest speaker for the discussion.

At that time, Sri Mulyani gave a normative answer. “In this world, nothing is impossible. If it’s possible, it’s possible. Whether it is for the best, we think it over together,” she said. “Later we will report to the president. The overall tax framework will be in accordance with the president’s direction.”

Sri Mulyani added that tax amnesty is a “fruit of the goodness of the State” in terms of abolishing taxes. She predicted that the plans of a follow-up for tax amnesty would be conflicted. “The pros and cons is when would the real tax amnesty come,” she remarked.

According to Rosan, it would be very good for the government if they issue a second phase of tax amnesty policy volume II. He also tried to convince the government that many entrepreneurs to participate. “As chairman of Kadin, I listen to the aspirations of entrepreneurs. Many regretted not joining the first phase,” he said.

In January, the agenda was brought back to the table. This time, Minister Suharso Monoarfa stated that the government would make an effective tax incentive scheme for the business world, without burdening the fiscal. “I agree about the tax (incentive), on how we can talk about payment methods, relief. Are we making another tax amnesty volume II, volume III? What would the form be like?” said Suharso at the “Kompas 100 CEO Forum” that was held virtually on January 21.

On May 4, Kadin made a similar suggestion. During a press release on the “Perceptions of Economy and Politics Ahead of Lebaran” survey, Rosan said that the tax amnesty program volume I was a quite successful policy. That is why the entrepreneur proposes a second phase. “We as business people believe that a second tax amnesty (is a good idea) because we saw how the first one went well.” 

Suharso did not deny that businessmen suggested another tax amnesty. On Saturday, May 29, he told Tempo that he met with a number of top businessmen at the end of 2020. During the gathering, they asked about the possibility of another tax amnesty program. They also expressed their complaints about Indonesia’s chaotic taxation system.

One of the complaints, Suharso said, was the potential for double taxing on dividends. Suharso said that businessmen see dividends as a net profit—the residual from the business profit that had already been taxed. But the dividend is subjected to additional taxes when distributed to shareholders.

Meanwhile, Suharso said that in the meeting he asked businessmen to help the government which was experiencing financial difficulties, for example by buying vaccines. “It’s expensive, tens of trillions,” he said.

Coordinating Minister for the Economy Airlangga Hartarto preparing to deliver a statement regarding the national economy during the Covid-19 pandemic in Jakarta, May 2020. Antara/Akbar Nugroho Gumay

These aspirations, he added, were conveyed to President Joko Widodo, together with Minister Airlangga. “The main thing is about having a tax system that makes it easier for taxpayers,” said Suharso.

Meanwhile, Airlangga did not answer Tempo’s request for confirmation. Susiwijono, Secretary of the Coordinating Ministry for the Economy, requested that the question be asked to the ministry of finance as the technical ministry. “In accordance with the direction of the coordinating minister, because there has been a letter from the president to the DPR leadership. We are waiting for the process and results of the discussion to be carried out at the DPR,” said Susiwijono on May 26.


MINISTER Sri Mulyani was initially cautious about the planned tax amnesty program. Her attitude changed after a cabinet meeting on March 31. The meeting, chaired by President Jokowi, resulted in a decision to include the tax amnesty policy in the General Provisions and Tax Procedures Bill, which at that time was to be submitted to the DPR.

Several days prior, Sri Mulyani was still reassuring the media that there was no discussion related to tax amnesty in the 2021 legislation program. “For tax amnesty, in the legislation program, there are three bills that relate to us, namely the bill on central and provincial financial relations, the bill on financial sector reforms, and the bill on the KUP, which was the government’s initiative since 2016,” she said in the “Our State Budget” press conference, March 24.

Sri Mulyani tried to clarify the hot issue on the tax amnesty plan during a working meeting with the DPR’s Finance Commission on May 24. She explained that the tax amnesty program scheduled by the government is different from the one in 2016, even though the legal basis is the same, namely Law No. 11/2016 on tax amnesty. With the KUP Bill, she said, the government will improve taxpayer compliance.

Finance Minister Sri Mulyani at the working meeting with Commission XI at the Parliament Complex, Senayan, Jakarta, March 2021. Tempo/M Taufan Rengganis

As an example, she said that the finance ministry will use data from the international Automatic Exchange of Information and access to taxpayers’ data that has been in effect since 2018. The government will follow up on the compliance rate of tax amnesty participants five years ago. “From there, we will follow up on several thousand taxpayers, and use the articles in the tax amnesty,” she said.

According to Sri Mulyani, the government plans to provide opportunities for non-compliant taxpayers to participate in a voluntary asset disclosure program, with a final income tax rate. Provisions of this matter are stipulated in the KUP Bill, in Article 37B paragraph 1. This article states that taxpayers can disclose net assets that have not been or are not disclosed in a statement letter, as long as the tax director-general has not found the data and/or information about the assets in question.

Sri Mulyani ensured that the finance ministry would focus on increasing compliance without creating a sense of injustice. “Both in terms of tax amnesty and in terms of compliance facilities that we provide, so that the public will have options that will encourage them to comply more,” she said.

The tax amnesty program plan, she added, would be proposed to stop criminal charges—replaced by paying the administrative sanctions. That way, the focus of the tax amnesty would be directed at state revenue.

Factions in the DPR have not said anything. Member of the Finance Commission from the Gerindra Faction, Kamrussamad, said that this program was a shortcut that is not necessarily a sure answer for providing the right solution for state revenue.

Kamrussamad reminded that the 2016-2017 tax amnesty program, which was held when the economy was growing positively, failed to reach its target. Only 956,000 taxpayers participated, less than half of the 20.1 million annual tax returns and far below the 32.7 million tax ID holders at the time.

The repatriation rate from the tax amnesty program volume I is also considered low at around Rp147 trillion, accounting for just 3 percent. The contribution to the revenue was only Rp135 trillion, including a redemption of Rp114 trillion, Rp18.6 trillion arrears, and Rp1.75 trillion worth of payment of preliminary evidence. Kamrussamad also said that the previous tax amnesty was followed by a decrease in tax revenue ratio—from 10 percent of the GDP in 2016 to 10.36 percent in 2017.

He suggested the government to carry out fundamental reforms on tax regulations in a serious and comprehensive manner. “Build taxpayers’ trust by guaranteeing zero corruption in taxation. Have the courage to dismiss corrupt officials up to two levels above and two levels down,” said Kamrussamad.

A similar sentiment was made by another member of the Financial Commission, Andreas Eddy Susetyo. The Indonesian Democratic Party of Struggle (PDI-P) politician emphasized the importance of a comprehensive tax reform, including simplifying the administration process. “The administration must be as simple as possible,” he said.

Tauhid Ahmad, Executive Director of the Institute for Development of Economics and Finance (Indef) has similar concerns to those raised by Minister Sri Mulyani during the Kadin event. Tauhid believes that the program could result in taxpayers becoming accustomed to delaying or not reporting their assets in full to the tax authorities. “They would use it as an excuse to postpone, as there would be a precedent for tax amnesties volume II, volume III, and so on,” he said.

The KUP Bill seems to have become another item in the long list of hot discussions on new laws. In the 2019 Priority National Legislation Program, the draft in the Financial Sector Reform, Development and Strengthening Bill is also queued. Since last year, the government’s plan to issue an omnibus law for the financial sector has sparked concerns among many about the fate of Bank Indonesia’s independence. The DPR really has a lot of homework to finish during the remainder of 2021.


مقالات ذات صلة

اترك تعليقاً

لن يتم نشر عنوان بريدك الإلكتروني. الحقول الإلزامية مشار إليها بـ *

زر الذهاب إلى الأعلى