Consolidation of Law of The Republic of Indonesia Number 8 of 1983 Concerning Value Added Tax on Goods and Services and Sales Tax on Luxury Goods as Amended by Law of The Republic of Indonesia Number 7 of 2021

 

To encourage sustainable economic growth in establishing a just, prosperous and well-off society based on Pancasila and the 1945 Constitution of the Republic of Indonesia, various measures pertaining to consolidative fiscal policies by the Government are required.

 

These consolidated fiscal policies may be realised by undertaking strategic measures that focus on improving the budget deficit and increasing the tax ratio, among others, through the implementation of policies to increase tax revenue performance, reforms of tax administration, broadened tax basis, the establishment of a tax system that emphasises the principles of justice and legal certainty, as well as increasing taxpayers' compliance. At the global level, countries worldwide are currently implementing various tax policies expected to boost revenues by expanding the tax base and adjusting tax rates.

 

To increase the tax ratio, the Government has made various efforts, including tax reforms that focus on organisation, human resources, data-based information technology, business processes and tax regulations. This is carried out by improving service functions, implementing the Tax Amnesty program, implementing the Automatic Exchange of Financial Account Information scheme and strengthening the effectiveness of the extensification function and law enforcement. However, this is insufficient to compensate for changing business patterns and the constantly changing dynamics of globalisation and to counter existing aggressive tax planning practices.

 

Therefore, in line with sustainable tax reforms, specifically, in the regulatory and business process aspects, it is necessary to adjust tax policy arrangements in a comprehensive, consolidated and harmonious manner. As such, the Law on the Harmonisation of Tax Regulations is required. Adjustment of the policy-setting aims to promote sustainable economic growth and encourage the acceleration of economic recovery; optimise state revenues to finance national development independently towards a just, prosperous and well-off Indonesian society; realise a fairer tax system with more legal certainty; carry out administrative reforms, consolidated taxation policies, and broaden the tax basis; and increase Taxpayers' compliance.

 

Comprehensive, consolidated and harmonious tax policies are implemented through regulations covering General Provisions and Tax Procedures, Income Tax, Value Added Tax and Sales Tax on Luxury Goods, Taxpayer Voluntary Disclosure Program, Carbon Tax and Excise.

 

Materials relating to General Provisions and Tax Procedures included several amended and/or added provisions, among others, concerning cooperation in assistance in the collection of taxes amongst countries, Taxpayer’s power of attorney, provision of data in the context of law enforcement and cooperation in the interest of the state and expiration of tax criminal prosecution.

 

Materials relating to Income Tax include several amended and/or added provisions, among others, concerning changes in the imposition of taxes on in-kind and/or fringe benefits, individual and corporate Income Tax rates, depreciation and amortisation as well as international agreements/treaties in the field of taxation.

 

Changes to materials relating to Value Added Tax and Sales Tax on Luxury Goods include but are not limited to reduced exemptions of taxable objects of Value Added Tax, restipulation of Value Added Tax facilities, changes to Value Added Tax rates and imposition of final Value Added tax rates.

 

To encourage taxpayers' compliance, the Taxpayer Voluntary Disclosure Program materials provide an opportunity for taxpayers to disclose their undisclosed assets. Furthermore, there are new provisions on the carbon tax on carbon emissions with a negative impact on the environment. Carbon tax is imposed by taking into account the carbon tax roadmap and/or the carbon market roadmap. Changes to the provisions on the materials relating to Excise.

 

To encourage sustainable economic growth in establishing a just, prosperous and well-off society based on Pancasila and the 1945 Constitution of the Republic of Indonesia, various measures pertaining to consolidative fiscal policies by the Government are required.

 

These consolidated fiscal policies may be realised by undertaking strategic measures that focus on improving the budget deficit and increasing the tax ratio, among others, through the implementation of policies to increase tax revenue performance, reforms of tax administration, increased tax base, the establishment of a tax system that emphasises the principles of justice and legal certainty, as well as increasing taxpayers' compliance. At the global level, countries worldwide are currently implementing various tax policies expected to boost revenues by expanding the tax base and adjusting tax rates.

 

To increase the tax ratio, the Government has made various efforts, including tax reforms that focus on organisation, human resources, data-based information technology, business processes and tax regulations. This is carried out by improving service functions, implementing the Tax Amnesty program, implementing the Automatic Exchange of Financial Account Information scheme and strengthening the effectiveness of the extensification function and law enforcement. However, this is insufficient to compensate for changing business patterns and the constantly changing dynamics of globalisation and to counter existing aggressive tax planning practices.

 

Therefore, in line with sustainable tax reforms, specifically, in the regulatory and business process aspects, it is necessary to adjust tax policy arrangements in a comprehensive, consolidated and harmonious manner. As such, the Law on the Harmonisation of Tax Regulations is required. Adjustment of the policy-setting aims to promote sustainable economic growth and encourage the acceleration of economic recovery; optimise state revenues to finance national development independently towards a just, prosp