Indonesia Government has applied tax reform policy by running the tax amnesty program between 1 July 2016 and 31 March 2017. The background of this policy is because most of financial resources for the development is coming from tax revenue. Not only that, the recent situation shows that the Government’s budget in 2015 was deficit and also the Government sees so many Indonesian’s assets located out of Indonesia that could be withdrawn to Indonesia in order to support the implementation of Government’s agendas to collect additional funds that can be used to finance its costly infrastructure and social development programs.


To achieve the Government’s agendas and to restore the budget deficit ease, the Government has issued Law No. 11 of  2016 dated 1 July 2016 regarding Tax Amnesty (Law 11/2016). In fact, the tax amnesty was formerly applied in 1984 and 2004 but it was not succeed. Therefore, now the Government is applying new tax amnesty policy up to 2017. The objective of the e Tax Amnesty under Law No. 11/2016 is to increase the level of tax compliance and obedience, by way of the government offers attractive tax rates (and immunity from prosecution) to tax dodgers so they will declare their offshore wealth and - if wanted - repatriate these funds into Indonesia.


Law 11/2016 stipulates that Tax Amnesty is the elimination of payable taxes, which the Tax Amnesty forgives or waives tax debts, administrative sanctions,  criminal sanctions and tax examinations, if the taxpayers disclose their onshore and offshore Assets and pay Redemption Money to obtain the Tax Amnesty from the Government. Law 11/2011 broadly defines Assets as an accumulation of added economic capability in the form of all assets, tangible and intangible, movable and immovable, used for conducting business and used not for conducting business, both located within and/or outside of the territory of the Republic of Indonesia. Redemption Money is defined as an amount of money paid to the state treasury to obtain Tax Amnesty and calculated based on Net Asset Value (NAV).


NAV is an un‑declared additional Assets minus un-declared loans in the latest of Income Tax Return (i.e. the 2015 tax year) (2015 SPT PPh). Article 3 Law 11/2016 stipulates that the taxpayers have the rights for Tax Amnesty except those who are under the criminal investigation by the public prosecutors’ office, court proceedings or serving punishment criminal sentence for tax crimes. But on the other side, based on Regulation of Director General of Taxation No. PER‑11/PJ/2016 of 2016 regarding the Continues Rule of Implementation Law No 11 Year 2016 regarding Tax Amnesty (DGT Regulation 11/2016) governs that non-participate Tax Payer in Tax Amnesty following (i) farmer, (ii) fisherman, (iii) retired, (iv) Indonesian workers who has the amount of income in the last fiscal year is under Non-Taxable Income (Penghasilan Tidak Kena Pajak – PTKP) or (v) patrimonial undivided and (vi) Indonesian citizen who stay in the overseas more than 183 days in 1 year in which didn’t have income from Indonesia. Tax Amnesty  under Law No. 11/2016  is applicable for the tax obligations to income tax (PPh), value added tax (PPN) or value added tax and luxury sales (PPnBM) up to the latest tax year (i.e. the 2015 tax year). For the implementation of the Law 11/2016, the Minister of Finance (MoF) has issued Regulation Number 118/PMK.03/2016 regarding the Implementation of Law Number 11/2016 dated 15 July 2016 (MoF Regulation 118/2016).  The payment of Redemption Money is based on the self assessment of the tax payer’s assets. Definition of assets based on Article 6 MoF Regulation 118/2016 is the declared assets in the latest of and un‑declared additional Asset in the latest of Income Tax Return. Furthermore, DGT Regulation 11/2016 stipulates that additional Assets are un‑declared patrimonial Assets and un‑declared grant Assets which and also beneficiary who receive the asset that have or do not have income under PTKP


In order to obtain Tax Amnesty, the taxpayer should submit Declaration Letter and other supporting documents to Directorate General of Taxation (DGT). The taxpayer should also pay Redemption Money to the appointed Receiving Bank. The Declaration Letter contains of identity of taxpayer, Asset, Debt, the NAV and Redemption Money calculation. Beside Declaration Letter, other requirements are (i) have a Tax Identification Number (NPWP); (ii) pay the Redemption Money, settle all Tax Arreas; (iii) settle underpaid tax or settle the tax restitution that shall not be returned to the taxpayer; (iv) submit the Latest Annual Income Tax ; (v) cancel the application for tax restitution, reduction or elimination of administrative sanctions, reduction or cancellation of incorrect tax assesment, objection, revision of tax assesment and decision letter, appeal, claim, and judicial review.


The payment of Redemption Money is  paid by the taxpayer through Designated Bank that has been  determined by Director General of Taxation (DGT). The taxpayer who has offshore assets and intends to be repatriated to Indonesia, then the payment of Redemption Money  can be  paid through the branch of Designated Bank and the assets later will be transferred by Gateway Bank   determined by Minister of Finance Regulation No 600/KMK.03/2016 regarding the Perception Banks (Bank Persepsi) that the banks are appointed as the acceptor of Redemption Money from Tax Amnesty. MoF Regulation 118/2016 set provisions on the applicable tax tariff or rates for the calculation of Redemption Money as follows:


1.     Tax tariff for declaration of onshore Assets and repatriated offshore Assets:

      a. 2% for  period of 1 July – 30 September 2016 ;

      b. 3% for period of 1 October - 31 December 2016;and

      c.  5% for period of 1 January – 31 March 2017.


2.     Tax tariff for declaration of non-repatriated offshore Assets:

      a. 4% for period of 1 July – 30 September 2016;

      b. 6% for  period of 1 October – 31 December  2016; and

      c. 10% for period of 1 January – 31 March 2017.


3.     Tax tariff for small business enterprises (UMKM) (having annual turnover up to IDR 4.8 billion):


a. 0.5% for the taxpayers declaring Assets with a value of up to IDR 10 billion; and

      b. 2% for the taxpayers declaring Assets with a value of more than IDR 10 billion.


As the follow up the said MoF Regulation, after the taxpayer paid the Redemption Money then filling and submitting the Declaration Letter and all the required supporting documents to the the MoF through the DGT. MoF through the DGT should issue a Statement Letter on Tax Amnesty at the latest 10 working days as of the submission of the Declaration Letter by the taxpayer.  In the event of the MoF though the DGT fails to issue the Statement Letter within the prescribed period, the Declaration Letter shall be deemed as  a Statement Letter on Tax Amnesty. The taxpayers can submit  three Declaration Letters before 31  Mach  2017.


There are a number of significant requirements for taxpayers that receive a Tax Amnesty. These include the requirement that the taxpayers transfer Assets to Indonesia under Tax Amnesty and make an investment using these Assets, which must be maintained for at least three years, and that the taxpayers declaring Assets in Indonesia must not transfer those Assets outside of Indonesia for at least three years.


Other consequences for obtaining a Statement Letter on Tax Amnesty:


 1.     the taxpayers will not be required to pay the payable tax for the fiscal years up to 2015 which assessment has not been issued and will not be subject to 

      administrative sanctions for any unpaid or underpayment of payable taxes in such years;

 2.     will receive elimination of taxation administrative sanctions in the form of interest and fines;

 3.     will not be subject to examination, examination (verification) of initial evidence, or prosecution for tax crimes;

 4.     must submit a realization report on the transfer of Assets to Indonesia and realization of the placement of their Assets in Indonesia;

 5.     must register land and/or building titles as well as shares that have not been registered in their name;

 6.     the taxpayers are not allowed to compensate their fiscal loss, compensate tax overpayment in their tax return, submit an application for tax restitution or

      revise their tax returns for the tax years up to 2015.


DGT Regulation 11/2016 provides there are two types of sanctions, namely :


1.     sanctions imposed on the taxpayers who do not to participate in the Tax Amnesty and the taxpayer  shall only  submit revision the Annual Tax Return which its include of  the asset from 1st January 1985 until 31st December 2015 with payment of fine for such revision. On this circumstance, the DGT will impose the normal income tax rate of Assets that have not been disclosed and a fine in the amount of 200% of the payable tax if the DGT within three years as of the enactment Law 11/2016 finds that there are Assets obtained by the taxpayer within period of 1 January 1985 to 31 December 2015 that have not been disclosed..


2.     sanction imposed on any party who disclose the taxpayer data related to Tax Amnesty faces a maximum prison sentence of five years. Prosecutions related to the violation of the taxpayer data secrecy by MoF, Deputy MoF, officials of MoF and other parties shall be based on the claim of the relevant taxpayer whose data privacy has been violated.


In addition to the foregoing, the MoF has issued regulations No.122/PMK.08/2016 dated August 8, 2016 regarding Procedures for the Transfer of Taxpayer Assets to Indonesia and Their Placement in Investment Instruments External to the Financial Market Through the Tax-Amnesty Framework and No. 123/PMK.08/2016 dated August 8, 2016 which amends MoF Regulation No. 119/ PMK.08/2016 regarding Procedures for Transferring Taxpayer Assets to the Territory of Republic of Indonesia and the Placement of Investment Instruments in the Financial Market Through the Tax Amnesty Framework.


T = (SPV – Rspv) x P


Further, recently, the MoF has also issued regulation No. 127/PMK.10/2016 dated August 23, 2016 regarding the Tax Amnesty Based on Law 11/2016 for Taxpayers in Possession of Indirect Assets in Special Purpose Vehichles (MoF Regulation 127/2016) in which MoF Regulation 127/2016 set provisions for the taxpayer who  intends to disclose their Asset in their special purpose vehicles  to obtain Tax Amnesty, where the amount of Redemption Money for SPV is similar to the provisions as regulated under Law 11/2016. The calculation that must be declared for SPV Assets as follows:

 T          = Value of SPV Assets as additional assets

 SPV     = Total value of SPV Assets

 Rspv    = Value of SPV Assets which have been disclosed in the latest 2015 SPT PPh

 P          = Proportion of each value which makes up the SPV Assets


September, 2016


Rivai Triprasetio & Partners


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Disclaimer: This newsletter is intended for informational purposes only and does not constitute legal advice provided by Rivai Triprasetio & Partners (RT&P). Any reliance on the material contained herein is at the user’s own risk. Should you require specific tax legal advice, please contact with lawyer having specialties in tax matters.


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