Attn.

1.

Echelon II Officials within the Head Offices of the Directorate General of Taxes;

 

2.

Heads of Regional Offices within the Directorate General of Taxes;

 

3.

Heads of Center for Taxation Data and Document Processing; and

 

4.

Heads of Tax Offices,

within the Directorate General of Taxes.

 

 

 

The Directorate General of Taxes (DGT) is tasked with collecting the continuously growing state revenues to support the State Budget (APBN) to realise the state goal of a just and prosperous society. In addition, the DGT administers Taxpayers and information data related to Taxpayers whose number is increasing.

Currently, the administrative system continues to be developed to administer Taxpayers and the said data. In addition, an appropriate strategy is required to provide services, supervision and law enforcement more effectively and efficiently according to the risk and compliance levels of the Taxpayers concerned. The said strategy is the implementation of compliance risk management and business intelligence.

Compliance risk management is a process of managing Taxpayer compliance risk systematically, measurably, objectively and repeatedly to establish a risk engine to support more efficient and effective decision-making at the DGT. The risk engine is used in risk weighting to generate risk levels displayed in the form of a Taxpayer compliance risk map.

The DGT has currently implemented compliance risk management pursuant to the Director General of Taxes Circular Letter number SE-24/PJ/2019 concerning the Implementation of Compliance Risk Management in Extensification, Supervision, Audit and Collection at the Directorate General of Taxes. However, in line with the need to accelerate the implementation of compliance risk management in all business processes at the DGT, it is necessary to add the implementation of compliance risk management to the service and tax education functions as well as improvements to the supervisory, audit and collection functions in the form of implementing transfer pricing compliance risk management with the support of business intelligence. The implementation of business intelligence is intended to automate and maintain added value to the compliance risk management process. These additions and improvements have been carried out to encourage more effective and efficient services, supervision and law enforcement.

In addition to supporting the implementation of compliance risk management in setting priorities for action plans, the implementation of business intelligence may be used at every stage of implementation and evaluation of supervision, audit and collection. Business intelligence produces outputs that are integrated with all strategic decisions in every business process at the DGT.

In respect of the foregoing, to encourage compliance and prevent Taxpayers’ non-compliance based on their behaviours and optimise the DGT’s resources of the DGT, it is necessary to stipulate a Director General of Taxes Circular Letter concerning the implementation of compliance risk management and business intelligence.

 

 

 

1.

Purpose

 

 

This Director General of Taxes Circular Letter is intended to provide general guidelines and elucidation for the implementation of compliance risk management and business intelligence in the extensification, services, tax education, supervision, audit, collection and transfer pricing testing at the DGT’s work units.

 

2.

Objectives

 

 

This Director General of Taxes Circular Letter aims to:

 

 

a.

provide guidelines on the implementation and application of compliance risk management and business intelligence in extensification, services, tax education, supervision, audit, collection and transfer pricing testing; and

 

 

b.

uniform procedures for the implementation of compliance risk management and business intelligence in the extensification, services, tax education, supervision, audit, collection and transfer pricing testing.

 

 

 

 

The scope of this Director General of Taxes Circular Letter is as follows:

 

1.

definitions;

 

2.

general provisions;

 

3.

provisions on CRM Implementation;

 

 

a.

the extensification function;

 

 

b.

the service function;

 

 

c.

the tax education function;

 

 

d.

the audit and supervision function;

 

 

e.

the collection function; and

 

 

f.

transfer pricing;

 

4.

provisions on BI implementation in the form of the utilisation of ATP and SmartWeb; and

 

5.

other provisions.

 

 

 

 

1.

Law Number 6 of 1983 concerning General Provisions and Tax Procedures as amended several times, last amended by Law Number 11 of 2020 concerning Job Creation;

 

2.

Law Number 7 of 1983 concerning Income Tax as amended several times, last amended by Law Number 11 of 2020 concerning Job Creation;

 

3.

Law Number 8 of 1983 concerning Value Added Tax on Goods and Services and Sales Tax on Luxury Goods as amended several times, last amended by Law Number 11 of 2020 concerning Job Creation;

 

4.

Law Number 19 of 1997 concerning Tax Collection with Distress Warrants as amended by Law Number 19 of 2000 concerning Tax Collection with Distress Warrants;

 

5.

Government Regulation Number 74 of 2011 concerning Procedures for the Exercise of Tax Rights and Fulfillment of Tax Obligations as amended by Government Regulation Number 9 of 2021 concerning the Tax Treatment to Support Ease of Doing Business;

 

6.

Minister of Finance Regulation 210/PMK.01/2017 concerning the Organisation and Work Procedures of the Directorate General of Taxes’ Vertical Agencies as amended by the Minister of Finance Regulation 184/PMK.01/2020 concerning the Organisation and Work Procedures of the Directorate General of Taxes’ Vertical Agencies;

 

7.

Minister of Finance Regulation 217/PMK.01/2018 concerning the Organisation and Work Procedures of the Ministry of Finance as amended by the Minister of Finance Regulation 87/PMK.01/2019 concerning the Organisation and Work Procedures of the Ministry of Finance;

 

8.

Minister of Finance Regulation 189/PMK.03/2020 concerning Procedures for the Implementation of Tax Collection of the Amount of Tax Payable;

 

9.

Minister of Finance Regulation 18/PMK.03/2021 concerning the Implementation of Law Number 11 of 2020 concerning Job Creation in the Fields of Income Tax, Value Added Tax and Sales Tax on Luxury Goods, as well as General Provisions and Tax Procedures;

 

10.

Minister of State Apparatus Empowerment and Bureaucratic Reform Regulation Number 49 of 2020 concerning the Functional Positions of Tax Dissemination Officers;

 

11.

Minister of State Apparatus Empowerment and Bureaucratic Reform Regulation Number 50 of 2020 concerning the Functional Assistant Positions of Tax Dissemination Officers;

 

12.

Minister of Finance Decree 577/KMK.01/2019 concerning Risk Management within the Ministry of Finance;

 

13.

Director General of Taxes Regulation Number PER-27/PJ/2016 concerning Service Standards in Integrated Service Points at the Tax Offices as amended by the Director General of Taxes Regulation Number PER-02/PJ/2017;

 

14.

Director General of Taxes Regulation Number PER-04/PJ/2020 concerning Technical Guidelines for the Administration of Taxpayer Identification Numbers, Electronic Certificates and VAT Registration;

 

15.

Director General of Taxes Regulation Number PER-12/PJ/2021 concerning Tax Education;

 

16.

Director General of Taxes Decree Number 702/PJ/2019 concerning Guidelines for the Implementation of Risk Management within the Directorate General of Taxes;

 

17.

Director General of Taxes Circular Letter Number SE-29/PJ/2012 concerning the Tax Collection Policy;

 

18.

Director General of Taxes Circular Letter Number SE-10/PJ/2015 concerning Guidelines for the Administration of Development, Utilisation and Monitoring of Data;

 

19.

Director General of Taxes Circular Letter Number SE-39/PJ/2015 concerning Taxpayer Supervision in the Form of Requests for an Explanation of Data and/or Information and Visits to Taxpayers;

 

20.

Director General of Taxes Circular Letter Number SE-49/PJ/2016 concerning Taxpayer Supervision Through the Information System;

 

21.

Director General of Taxes Circular Letter Number SE-15/PJ/2018 concerning the Audit Policy;

 

22.

Director General of Taxes Circular Letter Number SE-14/PJ/2019 concerning Procedures for Extensification; and

 

23.

Director General of Taxes Circular Letter Number SE-07/PJ/2020 concerning Policy for Taxpayer Supervision and Audit in the Context of Expanding the Tax Base.

 

 

 

 

1.

Definitions

 

 

Referred to herein this Director General Circular Letter:

 

 

a.

Compliance Risk Management, hereinafter abbreviated to CRM, is a process of managing Taxpayer compliance risk in a structured, measurable, objective and releated manner to support DGT’s best decision-making, including the stages of preparation, context setting, risk analysis, risk mitigation strategies by determining the options of treatment as well as monitoring and evaluation of compliance risk.

 

 

b.

Business Intelligence, hereinafter abbreviated to Bl, is a technique that combines architecture, information technology tools and databases for data collection, storage, management and knowledge management with data analysis tools to present useful information for planners and decision-makers.

 

 

c.

Taxpayer Compliance Risk is any likelihood or uncertainty that renders consequences on Taxpayers’ compliance.

 

 

d.

Compliance Risk Map is a matrix/map that describes the combination of the likelihood level and the consequence level and contains the value of the Taxpayer Compliance Risk based on the combination of elements of the likelihood level and consequence level.

 

 

e.

Extensification Function CRM Compliance Risk Map is a map that describes the Taxpayer Compliance Risk in registering themselves to be given Taxpayer Identification Numbers prepared based on the likelihood level of Taxpayers’ non-compliance and the level of Taxpayers’ contributions to revenues.

 

 

f.

Service Function CRM Compliance Risk Map is a map that describes the Taxpayer Compliance Risk in registering, reporting, paying and reporting correctly prepared to determine the treatment given to Taxpayers when providing tax services.

 

 

g.

Tax Education Function CRM Compliance Risk Map is a map that describes the Taxpayer Compliance Risk in exercising their tax rights and obligations, prepared based on the likelihood level of Taxpayers’ non-compliance and the level of Taxpayers’ contribution to revenues, with the aim of increasing knowledge and skills and changing Taxpayers’ behaviours.

 

 

h.

Audit Function and Supervision Function CRM Compliance Risk Map is a map that describes Taxpayer Compliance Risk in reporting, paying and correctly reporting prepared based on the likelihood level of Taxpayers’ non-compliance and the level of the Taxpayers’ contribution to revenues.

 

 

i.

Transfer Pricing CRM Compliance Risk Map is a map that describes the level of Compliance Risk of Taxpayers with independent transactions influenced by a special relationship and/or other transfer pricing transactions prepared based on the likelihood level of Taxpayers’ non-compliance and the level of contribution of Taxpayers’ impact on revenues.

 

 

j.

Collection Function CRM Compliance Risk Map is a map that describes the Taxpayer Compliance Risk in paying tax receivables prepared based on the collectibility level of tax receivables, the existence of Taxpayers and/or Tax Bearers and the ability to pay of the Taxpayers and/or Tax Bearers.

 

 

k.

Information Tools (Alket) is specific Data and Information related to each Taxpayer held and/or obtained by the DGT from various sources through the exercise of the duties and functions of the Units within the DGT for Data Utilisation other than by the Alket Production Unit, specifically to explore tax potentials.

 

 

l.

Tax Service is an activity or series of activities carried out by the DGT to fulfill service needs in the context of exercising the rights and fulfilling the obligations of Taxpayers pursuant to statutory tax provisions.

 

 

m.

Tax Office, hereinafter abbreviated to KPP, is a vertical agency of the DGT under and directly responsible to the Head of the Regional Office of the DGT.

 

 

n.

Tax Services, Dissemination and Consultation Service Office, hereinafter abbreviated to KP2KP, is a vertical agency of the DGT under and directly responsible to the Head of Small Taxpayer Office.

 

 

o.

List of Extensification Targets, hereinafter abbreviated to DSE, is a list of Taxpayers that have fulfilled the subjective and objective requirements but have not registered themselves to be given Taxpayer Identification Numbers.

 

 

p.

List of Selected Dissemination Targets, hereinafter abbreviated to DSPT, is a list of activity targets that will become participants in tax education activities selected on the Tax Education Function CRM Compliance Risk Map.

 

 

q.

List of Priority Targets for Tax Revenue Optimisation, hereinafter abbreviated to DSP3, is a list of Taxpayers constituting priority targets for potential optimisation throughout the current year, either through supervision or audits.

 

 

r.

List of Audit Priority Targets, hereinafter abbreviated to DSPP, is a list of Taxpayers that will be audited throughout the current year.

 

 

s.

List of Supervision Priorities, hereinafter abbreviated to DPP, is a list of Taxpayers that will be subject to material compliance examination by KPP in the current year.

 

 

t.

List of Disbursement Priorities is a list containing the collection priorities of Taxpayers estimated to have the ability to pay and/or settle assessments.

 

 

u.

List of Tax Collection Priorities is a list containing the collection priorities of Taxpayers that have one or more assessments estimated to expire within a period of 12 (twelve) months.

 

 

v.

Dashboard is a user interface application to display various metrics to monitor the success and alignment of strategies with strategic targets and objectives.

 

 

w.

Dissemination Information System is an information system used for the administration, monitoring and evaluation of the implementation of tax education and dissemination provided by the DGT.

 

 

x.

Approweb is an application owned by the DGT to juxtapose internal data and external data used as a tool to supervise Taxpayers.

 

 

y.

Ability to Pay, hereinafter abbreviated to ATP, is an application created through a data analytics process used to provide a description and/or prediction of the level of Taxpayers’ ability to pay.

 

 

z.

SmartWeb is a graph analytics-based application that is capable of grouping Taxpayers by presenting Taxpayer relationships in the form of a network, information on High Wealth Individual Taxpayers and their group companies, information on Beneficial Owners and Ultimate Beneficial Owners as well as indications of their non-compliance risk.

 

 

aa.

Taxpayer Compliance Committee, hereinafter referred to as the Compliance Committee, is a committee that functions to determine the follow-up of Taxpayers included in DSP3, which consists of the Head of KPP as the chairperson of the Committee and whose members consist of the Head of the Section of Tax Audit, Valuation and Collection, the Head of the Sections of Tax Supervision I to VI, the Head of Section of Data Quality Assurance and Functional Position Supervisor.

 

 

bb.

Letter of Inquiry, hereinafter abbreviated to SP2DK, is a letter issued by the Head of the Tax Office to request an explanation of data and/or information to Taxpayers concerning the alleged non-fulfillment of tax obligations pursuant to statutory tax provisions.

 

 

cc.

Report of Inquiry, hereinafter abbreviated to LHP2DK, is a report containing the implementation and results of the request for the explanation of data and/or information comprising conclusions and proposals/recommendations.

 

2.

General Provisions

 

 

a.

CRM implementation in general is a process of using a risk engine that produces the Taxpayer Compliance Risk Map to be used as a consideration in planning activities and determining priority actions in business processes as follows:

 

 

 

1)

Extensification function

 

 

 

 

Extensification Function CRM Compliance Risk Map is used to plan DSE which will later be used to determine the priority in granting Taxpayer Identification Numbers to Taxpayers that have fulfilled the subjective and objective requirements.

 

 

 

2)

Service function

 

 

 

 

Service Function CRM Compliance Risk Map is used to distinguish the types of notification of the Compliance Risk level of Taxpayers that apply for certain services.

 

 

 

3)

Tax education function

 

 

 

 

Tax Education Function CRM Compliance Risk Map is used to plan DSPT which will later be used to determine priority Taxpayers subject to tax education.

 

 

 

4)

Audit function and supervision function

 

 

 

 

Audit Function and Supervision Function CRM Compliance Risk Map and Transfer Pricing CRM Compliance Risk Map, ATP, SmartWeb and other data are used in the preparation of DSP3 to determine the priority exploration of Taxpayers’ potentials subject to the supervision in DPP and audits in DSPP.

 

 

 

5)

Collection function

 

 

 

 

Collection Function CRM Compliance Risk Map in the form of List of Disbursement Priorities and Tax Collection Priority List is used to plan Tax Collection with Distress Warrants along with the utilisation of ATP and SmartWeb.

 

 

b.

Bl implementation, in this case, ATP and SmartWeb may be utilised in the implementation of supervision function and audit function CRM as well as the collection function CRM. In addition, ATP and SmartWeb may also be used in the stages of supervision, audits and collection.

 

 

c.

The flow of CRM implementation and the Taxpayer Compliance Risk Map may be described as listed in Appendix A which constitutes an integral part of this Director General of Taxes Circular Letter.

 

3.

Provisions on CRM Implementation

 

 

a.

Provisions on the Implementation of extensification function CRM

 

 

 

Provisions related to CRM Implementation in the extensification function are as follows:

 

 

 

1)

Procedures for extensification commence with the extensification planning stage, wherein planning stage ends with the preparation of DSE;

 

 

 

2)

Directorate of Tax Extensification and Valuation stipulates DSE based on the Extensification Function CRM Compliance Risk Map and other data;

 

 

 

3)

Extensification Function CRM Compliance Risk Map is displayed on SIDJP-NINE extensification module with the following criteria:

 

 

 

 

a)

Extensification Function Taxpayer Compliance Risk is the likelihood level of non-fulfillment of tax obligations due to the non-compliance of Taxpayers that have fulfilled the subjective and objective requirements but have not registered themselves to be given Taxpayer Identification Numbers.

 

 

 

 

b)

Likelihood Level of Non-Compliance (X axis) is the level of non-compliance of Taxpayers that have fulfilled the subjective and objective requirements but have not registered themselves.

 

 

 

 

c)

Fiscal Consequence (Y axis) is the consequence of the loss of revenues from Taxpayers that have fulfilled the subjective and objective requirements but do not register themselves.

 

 

 

4)

SIDJP-NINE extensification module referred to in number 3) is an information system used for the administration, monitoring and evaluation of the implementation of tax extensification activities provided by the DGT.

 

 

 

5)

Procedures and provisions related to the implementation, follow-up, monitoring and evaluation of extensification activities are carried out pursuant to statutory tax provisions concerning procedures for extensification.

 

 

b.

Implementation of service function CRM

 

 

 

Provisions related to the implementation of service function CRM are as follows:

 

 

 

1)

Extensification Function CRM Compliance Risk Map presented in the service information system is presented with the following criteria:

 

 

 

 

a)

Service Function Taxpayer Compliance Risk is the likelihood level of the loss of tax revenues due to non-compliance of Taxpayers in registering, timely filing, payment and correct reporting;

 

 

 

 

b)

Likelihood Level of Non-Compliance (X axis) is the likelihood level of non-fulfillment of tax obligations in terms of registering, timely filing, payment and correct reporting; and

 

 

 

 

c)

Fiscal Consequence (Y axis) is the consequence of the non-fulfillment of tax obligations in terms of registering, timely filing, payment and correct reporting.

 

 

 

2)

To Taxpayers applying for certain tax services, service function CRM is applied by:

 

 

 

 

a)

Providing notification to update Taxpayer data; and/or

 

 

 

 

b)

Providing notification to inform of the tax obligations that have not been fulfilled by Taxpayers.

 

 

 

3)

Certain tax services referred to in number 2) are services in the taxation sector to which service function CRM may be applied as stated in Appendix B which constitutes an integral part of this Director General of Taxes Circular Letter and other additional services in the taxation sector as stipulated by the Director General of Taxes.

 

 

 

4)

The application for certain tax services referred to in number 2) is an application submitted:

 

 

 

 

a)

online through the DGT’s website;

 

 

 

 

b)

directly to KPP/KP2KP; and

 

 

 

 

c)

by post, a shipping company or courier services with proof of postage.

 

 

 

5)

The application for certain tax services submitted directly to KPP/KP2KP referred to in number 4) letter b) may be submitted by:

 

 

 

 

a)

individual Taxpayers/the highest management/management;

 

 

 

 

b)

Taxpayers’ Power of Attorney as evidenced by a Special Power of Attorney Letter;

 

 

 

 

c)

Taxpayers’ employees as evidenced by employee identity cards; or

 

 

 

 

d)

Parties other than numbers 1), 2) and 3) as evidenced by an appointment letter from the Taxpayers/power of attorney.

 

 

 

6)

The notification to update Taxpayer data referred to in number 2) letter a) is regulated as follows:

 

 

 

 

a)

the notification is given in the event that the Taxpayer does not update the data within a minimum period of 6 (six) months;

 

 

 

 

b)

the notification is given for all Taxpayer risk profiles; and

 

 

 

 

c)

in respect of the notification, the Taxpayer may apply for data changes pursuant to statutory tax provisions.

 

 

 

7)

The notification to inform of the tax obligations that have not been fulfilled by Taxpayers referred to in number 2) letter b) is regulated as follows:

 

 

 

 

a)

The scope of tax obligations that have not been fulfilled by Taxpayers is the non-compliance of Taxpayers in terms of registration, payment and timely filing;

 

 

 

 

b)

The notification consists of 3 (three) models, as follows:

 

 

 

 

 

(1)

gentle reminder;

 

 

 

 

 

(2)

modest reminder; and

 

 

 

 

 

(3)

harsh reminder;

 

 

 

 

c)

The notification to inform of the tax obligations that have not been fulfilled is issued based on the Taxpayers’ risk profile in the month the application is submitted;

 

 

 

 

d)

In the event that a Taxpayer submits several applications in the same month, the notification is issued only when the first application is submitted;

 

 

 

 

e)

For Taxpayers with a high-risk profile, the DGT’s information system forwards a list of tax obligations that have not been fulfilled by the Taxpayers as referred to in letter a) to the Account Representative and/or State Tax Bailiff on Approweb to be supervised pursuant to statutory tax provisions concerning Taxpayer supervision;

 

 

 

 

f)

How to submit the notification:

 

 

 

 

 

(1)

in the event that the application for certain tax services is submitted online through the DGT’s website as referred to in number 4) letter a), the notification to inform of the tax obligations the Taxpayer has not fulfilled is displayed on the DGT’s website when the Taxpayer accesses the service menu and the list of the tax obligations that have not been fulfilled by the Taxpayer are submitted automatically to the Taxpayer’s email address registered in the DGT’s information system after the Taxpayer applies for tax services;

 

 

 

 

 

(2)

in the event that the application for certain tax services is submitted directly to KPP/KP2KP by the individual Taxpayer/highest management/management or the Taxpayer’s Power of Attorney as referred to in number 5) letter a) and letter b), the list of tax obligations that have not been fulfilled by the Taxpayer may be printed and submitted directly to the Taxpayer/Taxpayer’s Power of Attorney; or

 

 

 

 

 

(3)

in the event that the application for certain tax services is submitted directly to KPP/KP2KP by the appointed parties as referred to in number 5) letter c) and letter d) or submitted by post, a shipping company or courier services with proof of postage as referred to in number 4) letter c), the list of tax obligations that have not been fulfilled by the Taxpayer is submitted by email for Taxpayers with all types of risk profiles and specifically, are printed for Taxpayers with a high-risk profile and later submitted by post, a shipping company or courier services with proof of postage;

 

 

 

8)

Procedures for the Application of service function CRM for tax service application

 

 

 

 

a)

procedures for the application of service function CRM for tax service application submitted online through the DGT’s website are outlined in Appendix C.1 which constitutes an integral part of this Director General of Taxes Circular Letter;

 

 

 

 

b)

procedures for the application of service function CRM for tax service application submitted directly to KPP/KP2KP are outlined in Appendix C.2 which constitutes an integral part of this Director General of Taxes Circular Letter; and

 

 

 

 

c)

procedures for the application of service function CRM for tax service application submitted by post, a shipping company or courier services with proof of postage are outlined in Appendix C.3 which constitutes an integral part of this Director General of Taxes Circular Letter.

 

 

c.

Implementation of tax education function CRM

 

 

 

Provisions related to the implementation of tax education function CRM are as follows:

 

 

 

1)

Tax education function CRM is implemented to support tax education planning by utilizing Tax Education Function CRM Compliance Risk Map;

 

 

 

2)

Tax Education Function CRM Compliance Risk Map is presented in the dissemination information system with the following criteria:

 

 

 

 

a)

tax education function Taxpayer Compliance Risk is all likelihood or uncertainty that renders consequences on Taxpayers’ compliance related to the exercise of their tax rights and obligations with the aim of increasing knowledge and skills and changing Taxpayers’ behaviours;

 

 

 

 

b)

Likelihood Level of Non-Compliance (X axis) is the likelihood level of non-fulfillment of tax obligations in performing timely filing, payment and correct reporting; and

 

 

 

 

c)

Fiscal Consequence (Y axis) is the consequence of the non-fulfillment of tax obligations in performing timely filing, payment and correct reporting.

 

 

 

3)

Tax Education Function CRM Compliance Risk Map is used as one of the considerations for the preparation of DSPT with the procedures outlined in Appendix D and documents in the format outlined in Appendix E and F which constitute an integral part of this Director General of Taxes Circular Letter;

 

 

 

4)

The period for the preparation of DSPT is no later than 7 (seven) business days prior to the implementation of the activity;

 

 

 

5)

The period for inputting DSPT data that is prepared using a word processing application and so forth as well as uploading the Official Report document into the Dissemination Information System is 14 (fourteen) calendar days after DSPT is approved and signed;

 

 

 

6)

Procedures and provisions related to the implementation, follow-up, monitoring and evaluation of tax education activities are carried out pursuant to the provisions under the regulations concerning tax education procedures.

 

 

d.

Implementation of audit function and supervisory function CRM

 

 

 

Provisions related to the implementation of audit function and supervisory function CRM are as follows:

 

 

 

1)

The Head of KPP as the Head of the Taxpayer Compliance Committee together with the members of the Taxpayer Compliance Committee discuss DSP3 to determine DSPP and DPP;

 

 

 

2)

DSP3 is prepared based on the Compliance Risk Map, Analysis Result Report (LHA) in the context of exploring tax potentials, ATP, SmartWeb, Transfer Pricing CRM Compliance Risk Map and/or other data and information from Corporate and Individual Taxpayers with the central status and other Taxpayers by referring to the regulations related to audit and/or supervision policies;

 

 

 

3)

Compliance Risk Map referred to in number 2), uses Audit Function and Supervision Function CRM Compliance Risk Map presented in the Approweb with the following Functions:

 

 

 

 

a)

audit function and supervisory function Taxpayer Compliance Risk is any likelihood or uncertainty that renders consequences on Taxpayers’ compliance in terms of the loss of tax revenues due to the Taxpayers’ non-compliance in performing timely filing, timely payment and complete and correct reporting;

 

 

 

 

b)

Likelihood Level of Non-Compliance (X axis) is the likelihood level of non-fulfillment of tax obligations in performing timely filing, timely payment and complete and correct reporting;

 

 

 

 

c)

Fiscal Consequence (Y axis) is the consequence of the non-fulfillment of correct tax obligations.

 

 

 

4)

Data and/or other information used as the basis for the preparation of DSP3 sourced from other than the Compliance Risk Map, are included in the information system provided by the DGT;

 

 

 

5)

Based on the results of the DSP3 discussion, the Taxpayer Compliance Committee prepares the Official Report of the Preparation of Compliance Risk Map and DSP3 Discussion to be determined as DSPP and DPP using the format outlined in Appendix G which constitutes an integral part of this Director General of Taxes Circular Letter which applies as a substitute for the Official Report of the Preparation of Compliance Map and DSP3 Discussion referred to in statutory tax provisions concerning audits of Taxpayers;

 

 

 

6)

For Taxpayers included in DSPP, KPP will follow up pursuant to statutory tax provisions concerning audits of Taxpayers;

 

 

 

7)

For Taxpayers included in DPP, KPP will follow up pursuant to statutory tax provisions concerning Taxpayer supervision;

 

 

 

8)

KPP prepares DPP using the format outlined in Appendix H which constitutes an integral part of this Director General of Taxes Circular Letter to be submitted to the Regional Office of the DGT;

 

 

 

9)

Data and Potential Supervision Division of the Regional Office of the DGT recapitulates DPP to be submitted to the Directorate of Tax Potential, Compliance and Revenue and the Directorate of Tax Data and Information using the format outlined in Appendix I which constitutes an integral part of this Director General of Taxes Circular Letter.

 

 

e.

Implementation of collection function CRM

 

 

 

Provisions related to the implementation of tax collection function CRM with Distress Warrants are as follows:

 

 

 

1)

To optimise the disbursement of tax receivables, KPP is required to determine collection priorities by referring to the prognosis for the disbursement of tax receivables and collection plans;

 

 

 

2)

Prognosis for the disbursement of tax receivables and collection plans referred to in number 1) is prepared using collection function CRM;

 

 

 

3)

collection function CRM generates the Tax Collection Priority List and List of Disbursement Priorities which are displayed in Approweb;

 

 

 

4)

Taxpayers in the Tax Collection Priority List and List of Disbursement Priorities are mapped according to their risk level into the risk position displayed on the Collection Function CRM Compliance Risk Map with the following criteria:

 

 

 

 

a)

Collection function Taxpayer Compliance Risk is any likelihood or uncertainty that renders consequences on Taxpayers’ compliance in the form of the loss of tax revenues due to non-fulfillment of the payment obligation for tax arrears caused by, among others, the loss of opportunity to collect tax liabilities and/or disburse tax receivables;

 

 

 

 

b)

the Taxpayers’ tendency to pay (X axis) is the likelihood level of the collectibility of receivables based on the existence and ability of Taxpayers and/or Tax Bearers to fulfill the obligation to pay tax receivables as well as the condition of the receivables.

 

 

 

 

c)

Fiscal impact (Y axis) is the consequence of the non-fulfillment of the obligation to pay tax receivables.

 

 

 

5)

Collection priorities prepared based on the Tax Collection Priority List and List of Disbursement Priorities which constitute the output of collection function CRM are followed up according to the risk order of each Taxpayer or according to other policies based on the Head of Tax Office’s considerations;

 

 

 

6)

The follow-up on Taxpayers in the Tax Collection Priority List and List of Disbursement Priorities is implemented pursuant to statutory tax provisions concerning Tax Collection with Distress Warrants.

 

 

 

7)

Prognosis for the disbursement of tax receivables and collection plans regulated in the provisions on collection policies is prepared using data from the Collection Function CRM Compliance Risk Map, ATP, SmartWeb and/or other data and information from Corporate and Individual Taxpayers with the central status as well as other Taxpayers by referring to the regulations related to collection policies.

 

 

 

8)

The Head of KPP as the Chairperson of the Taxpayer Compliance Committee together with the members of the Taxpayer Compliance Committee discusses the tax collection priority list and disbursement priority list to determine the prognosis for the disbursement of tax receivables and collection plans.

 

 

f.

Implementation of Transfer Pricing CRM

 

 

 

Provisions related to the implementation of Transfer Pricing CRM are as follows:

 

 

 

1)

Transfer Pricing CRM Compliance Risk Map is presented on Approweb with the following criteria:

 

 

 

 

a)

Taxpayer Compliance Risk Transfer Pricing is any likelihood or uncertainty that renders consequences in the form of the loss of tax revenues from Taxpayers having independent transactions influenced by a special relationship;

 

 

 

 

b)

Likelihood Level of Non-Compliance (X axis) is the likelihood level of non-fulfillment of tax obligations in terms of independent transactions influenced by a special relationship; and

 

 

 

 

c)

Fiscal Consequence (Y axis) is the consequence of the non-fulfillment of tax obligations in terms of independent transactions influenced by a special relationship.

 

 

 

2)

Transfer Pricing CRM Compliance Risk Map is used as one of the considerations for the preparation (of DSP3);

 

 

 

3)

KPP follows up on DSP3 as referred to in number 2) by testing the application of the arm’s length principle to transactions between related parties.

 

4.

Provisions on BI Implementation in the form of the utilisation of ATP and SmartWeb

 

 

a.

BI implementation at the DGT is intended to automate, accelerate and at the same time, protect the process of creating added value for the CRM process, thereby, the knowledge generated by BI may be integrated with all strategic decisions in the DGT’s business processes;

 

 

b.

Currently, implemented BI are ATP and SmartWeb applications;

 

 

c.

In CRM implementation, BI is utilised in the form of considerations for the Taxpayer Compliance Committee to determine priorities in the following matters:

 

 

 

1)

In the supervision function and audit function CRM

 

 

 

 

a)

ATP provides an overview of the Taxpayers’ ability to pay to determine DSP3, DPP and DSPP;

 

 

 

 

b)

SmartWeb provides an overview of the network and Taxpayers’ profiles to determine DSP3, DPP and DSPP;

 

 

 

2)

In the collection function CRM:

 

 

 

 

a)

ATP provides an overview of the Taxpayers’ ability to pay to determine the Prognosis for the Disbursement of Receivables and Collection Plans;

 

 

 

 

b)

SmartWeb provides an overview of the network and Taxpayers’ profiles to determine the Prognosis for the Disbursement of Receivables and Collection Plans;

 

 

d.

ATP and SmartWeb may be used at every stage of the implementation and monitoring/evaluation activities of supervision, audits, collection, application for installments or tax payment deferral;

 

 

e.

The utilisation of ATP:

 

 

 

1)

ATP is an indicator that provides a predictive overview of the Taxpayers’ ability to pay established based on historical data.

 

 

 

2)

ATP is displayed in the Approweb application in the CRM Module and is divided into 3 classes, as follows:

 

 

 

 

a)

Large class, consisting of Taxpayers registered at Large Taxpayer Offices;

 

 

 

 

b)

Medium class, consisting of Taxpayers registered at Medium Taxpayer Offices and Jakarta Special Regional Tax Office; and

 

 

 

 

c)

Small class consisting of Taxpayers registered at Small Taxpayer Offices.

 

 

 

3)

ATP uses a scoring approach based on the 4C analysis, namely Capacity, Capital, Character and Condition to provide an overview of the qualitative level of the Taxpayers' ability to pay which consists of:

 

 

 

 

a)

very low, which indicates that the Taxpayers’ liquidity level is relatively very low compared to other Taxpayers in their class;

 

 

 

 

b)

low, which indicates that the Taxpayers’ liquidity level is relatively low compared to other Taxpayers in their class;

 

 

 

 

c)

moderate, which indicates that the Taxpayers’ liquidity level is relatively moderate compared to other Taxpayers in their class;

 

 

 

 

d)

high, which indicates that the Taxpayers’ liquidity level is relatively high compared to other Taxpayers in their class; and

 

 

 

 

e)

very high, which indicates that the Taxpayers’ liquidity level is relatively very high compared to other Taxpayers in their class.

 

 

 

4)

The utilisation of ATP in supervision activities is as follows:

 

 

 

 

a)

ATP may be used as the consideration for the Taxpayers’ ability to pay in determining DSP3.

 

 

 

 

b)

the Account Representative selects the Taxpayers included in DPP and conducts comprehensive examination of the data and/or information to prepare SP2DK by considering the Taxpayers’ ATP indicator in the collectibility analysis.

 

 

 

 

c)

the Account Representative may utilise the ATP indicator to optimise the disbursement of revenue potentials for the issued SP2DK.

 

 

 

 

d)

KPP, Regional Office of the DGT, Head Office of the DGT may monitor the follow-up of SP2DK and LHP2DK by considering the ATP indicator.

 

 

 

5)

The utilisation of ATP in audits

 

 

 

 

a)

ATP indicator may be used as a reference for the collectibility level in the proposed audit.

 

 

 

 

b)

ATP indicator may provide an understanding of the Taxpayers’ ability to pay at the stage of preparing audit plans and conducting the audit but ATP is not used to change the concept of findings.

 

 

 

6)

ATP in collection activities may be used as one of the considerations in determining the prognosis for the disbursement of tax receivables and collection plans.

 

 

 

7)

The utilisation of ATP in other activities

 

 

 

 

a)

ATP indicator may be used to optimise the disclosure of untruth of actions or termination of investigations for state revenue purposes in preliminary investigations and investigations.

 

 

 

 

b)

ATP may be used in the examination process of the application for installments or tax payment deferral.

 

 

 

 

c)

ATP may be used in the examination process of the application for a reduction in the amount of article 25 income tax.

 

 

 

 

d)

ATP may be utilised in the examination process of the application for reduction and/or nullification of administrative penalties.

 

 

 

 

e)

ATP may be used to support other activities at the DGT to explore tax revenue potentials.

 

 

f.

The utilisation of SmartWeb

 

 

 

1)

SmartWeb is displayed in the Approweb application in the Taxpayer Account module.

 

 

 

2)

SmartWeb displays information in the form of:

 

 

 

 

a)

the beneficial owner and/or ultimate beneficial owner which constitutes an entity or individual that ultimately owns or controls a legal entity, such as a company, trust and/or foundation;

 

 

 

 

b)

a taxpayer group which constitutes an alliance of two or more Taxpayers in a business group consisting of related parties pursuant to the provisions under Article 18 paragraph (4) of the Income Tax Law and/or Article 2 paragraph (2) of the VAT Law or parties without a special relationship but are known as a business group.
c) controlled transactions, in this case, transactions between parties with a

 

 

 

 

c)

controlled transactions, in this case, transactions between related parties pursuant to the provisions under Article 18 paragraph (4) of the Income Tax Law.

 

 

 

 

d)

indication of non-compliance risk in terms of controlled transaction reporting.

 

 

 

 

e)

High Wealth Individual Taxpayers and their families and/or group companies.

 

 

 

3)

The utilisation of SmartWeb in supervision

 

 

 

 

a)

SmartWeb may be used as the material in determining DSP3.

 

 

 

 

b)

The Account Representative selects the Taxpayers included in DPP and conducts comprehensive examination of data and/or information to prepare SP2DK by utilizing SmartWeb in identifying the special relationship between Taxpayers.

 

 

 

4)

The utilisation of SmartWeb in audits

 

 

 

 

a)

SmartWeb may be utilised as the consideration in determining indications of non-compliance when proposing an audit.

 

 

 

 

b)

SmartWeb may be utilised as the consideration for proposing an audit for the group Taxpayers.

 

 

 

 

c)

SmartWeb may provide an overview of the special relationship and enrich the Taxpayers’ profile at the stage of preparing audit plans and conducting the audit.

 

 

 

5)

SmartWeb may be utilised in collection activities to identify tax bearers.

 

 

 

6)

SmartWeb may be utilised to support other activities at the DGT to explore tax revenue potentials.

 

 

 

 

 

 

1.

Parameters and/or variables that affect RM Compliance Risk Map are prepared based on the results of discussions conducted by the directorate tasked with formulating and implementing policies and technical standardisation in the tax data and information sector along with the technical directorates within the Head Office of the DGT;

 

2.

The flow, types of services, procedures and document formats that support the preparation and administrative follow-up are further regulated in:

 

 

a.

Appendix A concerning the Flow of CRM Implementation and Taxpayer Compliance Risk Map;

 

 

b.

Appendix B concerning Certain Tax Services to Which Service Function CRM is Applied;

 

 

c.

Appendix C concerning Procedures for the Application of Function CRM;

 

 

d.

Appendix D concerning Procedures for the Preparation of DSPT;

 

 

e.

Appendix E concerning the Sample Format of the Official Note of the Submission of the List of Proposed Taxpayers to Be Included in DSPT and the Format of the Official Note of the Response to the List of Proposed Taxpayers to Be Included in DSPT;

 

 

f.

Appendix F concerning the Sample Format of Official Report of the Preparation of DPST outside the Sample Tax Education Function CRM Risk Map (BA DSPT Non CRM);

 

 

g.

Appendix G concerning the Sample Official Report of the Preparation of Compliance Risk Map and DSP3 Discussion to Be Stipulated as DSPP and DPP;

 

 

h.

Appendix H concerning the Sample Format of DPP; and

 

 

i.

Appendix I concerning the Sample Format of DPP Recapitulation,

 

 

which constitute an integral part of this Director General of Taxes Circular Letter.

 

 

 

 

With the enactment of this Director General of Taxes Circular Letter, the Director General of Taxes Circular Letter Number SE-24/PJ/2019 concerning the Implementation of Compliance Risk Management in Extensification, Supervision, Audit and Collection at the Directorate General of Taxes is revoked and declared invalid.

 

 

This Director General Circular Letter is conveyed to be known and implemented accordingly and with full responsibility.

 

Enacted in Jakarta

on 13 July 2021

DIRECTOR GENERAL,

signed

SURYO UTOMO