AN OVERVIEW OF INDONESIA TAX SYSTEM

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Diagram. General Provision and Tax Procedure Law. Duty CYCLE (Framework of GPTP). Citizen. FISCUS. . . . . . . TIN RegistrationBookkeeping/RecordingPayment. VerificationAuditInvestigation. Evaluation. Assessment REFUND. Charge COLLECTION. Complaint Appeal. Charge Reporting(Tax Return). . . STRUCTURE OF TAX LAWS.

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AN OVERVIEW OF INDONESIA TAX SYSTEM DIRECTORATE GENERAL OF TAXES OF INDONESIA ASEAN TAX SYSTEM SEMINAR Bangkok, 16-17 September 2010

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OUTLINE

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General Provision and Tax Procedure Law

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TAX CYCLE (Framework of GPTP ) FISCUS TAXPAYER TIN Registration Bookkeeping/Recording Payment Verification Audit Investigation Tax Reporting (Tax Return) ASSESSMENT Objection Appeal TAX REFUND TAX COLLECTION

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FORMAL RULING STRUCTURE OF TAX LAWS LAND & BUILDING TAX INCOME TAX STAMP DUTIES VAT/STLG Other expense allude to this law EXCEPT GPTP LAW SELF REGULATED BY RELEVANT LAWS

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Income Tax

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TAXABLE PERSON Individual A unified legacy as a unit in lieu of the recipients A Corporation Permanent Establishment

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TAXABLE PERSON Resident Taxpayer a person who dwells in Indonesia or is available in Indonesia for more than 183 (one hundred and eighty-three) days inside any 12 (twelve) month time span, or a person who specifically assessable year is available and plans to live in Indonesia; an organization set up or domiciled in Indonesia; a unified legacy as a unit in lieu of the recipients .

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TAXABLE PERSON Non-inhabitant citizen a person who does not live in Indonesia or is available in Indonesia for not more than 183 (one hundred and eighty-three) days inside any 12 (twelve) month time span, and a company which is not set up or domiciled in Indonesia leading business or bringing out exercises through a changeless foundation; a person who does not live in Indonesia or is available in Indonesia for not more than 183 (one hundred and eighty-three) days inside any 12 (twelve) month duration, and an enterprise which is not built up or domiciled in Indonesia getting pay from Indonesia other than from directing business or helping out exercises through a perpetual foundation .

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NON-TAXABLE PERSON Certain administrative units; A strategic mission; International associations as dictated by Minister of Finance Decree; The authorities of discretionary and consular mission or other remote authorities; The authorities of the global association agent.

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TAXABLE PERSON Related Party Taxpayers Capital proprietorship ; Management or innovation control ; Family relationship .

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BASIC TAX CALCULATION Corporate Taxable Income : Gross Revenues A Deductions B (- ) Net Income C Loss conveyed forward D (- ) Taxable Income E General tax (Law 36/2008): 28% and 25% beginning on 2010

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Taxable Income In 1 Taxable Year Tax Credit Tax Return: Income Tax Payable short Tax Credit Income Tax Calculation At year end Settlement of Tax underpayment/excessive charge BASIC MECHANISM

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TAXABLE OBJECT Taxable Object is salary, characterized as any expansion in monetary capacity got or accumulated by a Taxpayer, originating from Indonesia and in addition from seaward, in whatever name or frame, that can be utilized to expend or to expand the abundance of the Taxpayer .

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TAXABLE OBJECT Sources of Income : wage from work regarding work and autonomous individual administrations ,, for example, pay, honorarium, wage determined by a doctor, legal official, statistician, bookkeeper, legal advisor; salary from leading business and exercises; wage from capital as versatile or ardent property, for example, intrigue, profit, sovereignty, lease, pick up on offers of property, or rights not utilized for the business; other wage, for example, release of obligation, blessing.

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TAXABLE OBJECT Exclusion 1. By and large connected : resources including money got by a company, in return for shares or capital commitment . profits or dissemination of benefit got or gathered by occupant restricted partnerships, cooperatives, state-claimed organizations, or nearby state-possessed companies   through proprietorship in ventures built up and domiciled in Indonesia, gave that : profits are paid out from held income . restricted enterprises and state claimed organizations and nearby state-possessed organizations getting the dividends must claim no less than 25% of the aggregate paid-in capital . Protest of Final Income Tax.

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TAXABLE OBJECT Exclusion 1. By and large connected (Individual) : Aid, gift, including zakat and different religious gift; Gifts; Inheritances; Benefits in sorts; Payments by an insurance agency to an individual; Scholarship.

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TAXABLE OBJECT Exclusion 2. Particularly connected : commitment got or collected by an annuity subsidize affirmed by the Minister of Finance either paid by a business or a representative . dissemination of benefit got or accumulated by an individual from a restricted organization whose capital does not comprises of shares, organization, affiliation, firma, or kongsi . salary got or gathered by a funding organization as benefit dissemination of a joint-wander organization built up and leading business or occupied with exercises in Indonesia, gave that : the investee is a little or medium-sized undertaking or occupied with exercises in business parts controlled by the Minister of Finance Decree ; dan the investee's shares are not exchanged the stock trade in Indonesia .

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DEDUCTIBLES Expenses to acquire, to gather and to secure pay, including expense of materials, expenses regarding work or administrations including compensation, pay rates, honoraria, rewards, tips and compensation as cash, premium, rents, sovereignties, travel costs, squander preparing costs, protection premiums, authoritative costs and assessments other than wage charge ; Depreciation of substantial resource and amortization of rights and different uses which have valuable existence of more than 1 (one) year ; Contributions to an annuity support affirmed by the Minister of Finance ; Losses brought about from the deal or exchange of properties possessed and utilized as a part of business or utilized with the end goal of winning, gathering and securing pay ;

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DEDUCTIBLES Losses from remote trade ; Costs identified with innovative work completed in Indonesia ; Scholarships, apprenticeships and preparing costs ; Debts which are really uncollectible. Certain gifts.

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TAX RELIEF (Individual TP)

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Non-DEDUCTIBLES Article 9 Paragraph (1) Income Tax Law: Distribution of benefit in whatever name or frame, for example, profits, including profits paid by an insurance agency to policyholders, and any conveyance of the surplus by an agreeable ; Expenses charged or brought about for the individual advantage of shareholders, accomplices or individuals ; Formation or collection of stores, aside from hold for awful debt  of a bank or a back rent, saves in a protection business, and stores for recovery costs by and large mining, the terms and states of which might be stipulated by the Minister of Finance Decree ; Insurance premiums for wellbeing, mischance, life, double reason, and instruction protection which are paid by an individual Taxpayer, with the exception of those paid by a business where premiums are dealt with as pay of the Taxpayer ; Consideration or compensation identified with work or administrations given as an advantage in kind, aside from arrangement of sustenance and drinks for representatives or thought or compensation given as an advantage in kind in specific areas and regarding work as stipulated by the Minister of Finance Decree ; Excessive remuneration paid to shareholders or other related gatherings as a thought for work performed ;

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Non-DEDUCTIBLES Article 9 segment (1) Income Tax Law (proceeded… ): Gifts, help or gifts, and legacies alluded to in Article 4 section (3) subparagraph an and subparagraph b, with the exception of zakat on salary really paid by a Moslem individual Taxpayer and additionally an occupant Taxpayer other than individual claimed by a Moslem to an amil zakat board or other amil zakat foundations built up or affirmed by the legislature ; Income assess ; Costs caused for the individual advantage of a Taxpayer or his wards ; Salaries paid to an individual from an affiliation, firma, or constrained association the capital of which does not comprise of stocks ; Administrative punishments as premium, fines, and extra charges, and additionally criminal punishments as fines forced compliant with the duty laws .

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Non-DEDUCTIBLES Foreign Business Loss Foreign Loss must not be consolidated to ascertain assessable salary .

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TARIFF Individual Taxpayer Law 36/2008

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TARIFF Corporate citizen Law 36/2008 28% and 25% beginning on 2010

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VAT

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VAT Characteristics Indirect Tax Objective Tax 3. Household Consumption Tax Multi S tage Tax Invoice Mechanism 6. Single Tariff 7. Non Cumulative

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VAT Mechanism General Specific (VAT Withholding Agent) VAT = Output Tax – Input Tax VAT = Tariff X Tax Base

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Taxable Object : Article 4 An exchange of Taxable Goods did in the Custom Area by a Firm; Importation of Taxable Goods; Rendering of Taxable Services in the Customs Area by a Firm; Utilization of impalpable Taxable Goods acquired from outside the Customs Area inside the Custom Area; Utilization of Taxable Services got from outside Custom Area inside the Custom Area; or The fare of Taxable Goods by a Taxable Person for VAT purposes. The fare of Taxable Services by a Taxable Person for VAT purposes. The fare of immaterial Taxable Goods by a Taxable Person for VAT purposes.

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Non Taxable Goods Products of mining and boring, taken specifically from the source; Daily necessities required by open; Food and drinks served in lodging, eatery, and such different spots; Money, gold, and important records.

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Transfer of Taxable Goods: Transfer of title over Taxable Goods under the terms of an agreeme

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