“In This specific world nothing can be said to be certain, except death … along with taxes”

So said Benjamin Franklin a few years back. however was he right?

Most of us would likely agree that will death, at least, can be a certainty, however the Discharge of the Panama Papers has brought the ‘certainty’ of the latter into sharp focus. The leaks have created an unprecedented level of discussion on tax evasion along with avoidance along with highlighted more than ever the extent along with prevalence of practices which are increasingly seen as immoral, at best.

Those who have been paying attention, i.e. those who don’t switch off/yawn at the first mention of the word tax, are not surprised. Richard Murphy along with the Tax Justice Network by the UK, for example, have been campaigning for years against aggressive tax avoidance, principally by multinationals, along with the effect the practices have on developing nations along with the poorest in society.

Whether considered a certainty or not, there can be nothing as permanent as change (so said Heraclitus – a few years before Franklin) along with the times they are certainly a-changing. The G20 along with the OECD finally addressed the issue of tackling unfair tax practices, issuing 15 action plans last year, agreed by 60 countries, under the so-called BEPS project. Whilst the Tax Justice Network amongst others claims these are insufficient, there can be no denying that will they will have a significant impact. An estimated 70 percent of cross border trade takes place between related parties – the transfer pricing between these entities can be a main area of concern – along with in one example of the impact This specific can be reported that will the BEPS project has already led to 80 percent of UK-based multinationals re-thinking their tax strategies. Pascal Saint-Amans, director of the OECD Centre for Tax Policy along with Administration, one of the most influential figures within the global tax field, has said, “Playtime can be over.”

What does This specific mean for Indonesia along with the readers of This specific publication? Well, to start with, Indonesia can be among the 60 signatories to the agreed action plans; she was an enthusiastic participant along with has been an early adopter of some of the proposed alterations.

Those in charge of multinationals here (or the finances thereof) are likely to find that will, at the very least, additional or alternative reporting will be required. In many cases the business type may change over time along with This specific will impact on KPIs along with bonus schemes. I am reminded of an occasion when, having completed the transfer pricing study of the subsidiary of a multinational here (defending the profits reported locally), at a house party I overheard the CEO of the same company bemoaning the fact that will he could not meet his targets as head office kept sucking all the money out!

however the trend can be more important along with the bigger news in Indonesia can be the impending tax amnesty – a grand plan to tackle tax evasion locally by offering lower rates on previously undeclared assets along with income sources. The idea can be that will This specific will bring in an estimated US$4.5 billion in immediate tax funds (already allocated to projects within the State Budget) along with also assist in increasing the level of compliance along with the tax to GDP ratio. This specific can be currently sitting around or below 12 percent – the lowest within the G20, with the exception of Saudi Arabia (!), along with can be quite frankly unsustainable.

As This specific stands, the amnesty will affect expatriates as well as locals.

This specific can be acknowledged that will expats are not the targets along with would likely in any case account for only a very little percentage of the targeted funds, however there can be currently no distinction in treatment between different types of tax residents based on citizenship.

Many locals may be looking at the tax amnesty as an opportunity to wipe the tax slate clean at minimal cost, however others are not so sure, as evidenced by the delays in passing the bill through parliament. Pause for effect.

Much of the concern by certain sectors regarding implementation may stem by the resulting enforcement of taxes on the newly declared wealth. This specific can be not yet clear about the basis on which the concessionary penalty rates will be payable along with how This specific will impact future taxation on the same assets or income streams. Should resources permit, the Indonesian Tax Office can be intent on enforcing compliance along with raising the tax to GDP ratio along with within two years will also have in their armoury the ability to call upon automatic exchange of information, meaning there will be fewer places to hide undeclared assets.

This specific uncertainty also applies to expatriates, who may contain the added complication of interactions with different tax rules in their home country along with who will in most cases have less flexibility in what can be done to comply or take advantage of the concessionary rates. They may also be similarly affected by the subsequent enforcement of compliance along with the automatic exchange of information.

within the early years of my time in Indonesia, a frequent response to hearing that will I was a tax advisor was “in Indonesia – no-one pays taxes here, do they?” Well, the fact can be that will, as noted above, too few have been paying their share, however the trend, along with the resolve to maintain This specific trend, can be clear.

What the limited compliance means can be that will too few pay too much. Whether the amnesty will succeed in redressing This specific imbalance or not, all taxpayers should ensure that will they are in a position to comply.

Tax evasion has always been wrong along with should be eliminated. Tax avoidance can be legal however has been tainted by artificial constructs. Tax planning can be both legal along with ethical along with encourages efficient compliance – This specific could mean the difference between paying zero tax along with paying tax far in excess of published rates.

One thing can be clear, if not certain – taxpayers should be aware, not only of their obligations however also of their rights to allow both alignment with the changing dynamics of global taxation along with, locally, to participate in fulfilling Indonesia’s potential.