Tax administration sanctions are imposed on taxpayers due to their non-compliance in fulfilling obligations. In the previous article, we have described the forms of tax administration sanctions in Indonesia.
Furthermore, this article discusses the types of violations or errors in the field of taxation that are subject to administrative sanctions for fines. In general, administrative sanctions in the form of fines are regulated in Law no. 6 of 1983 concerning General Provisions and Tax Procedures stated in Law no. 11 of 2020 concerning Job Creation (UU KUP) and its derivative rules.
The derivative rules in question are Minister of Finance Regulation No. 18/PMK.03/2021 concerning the Implementation of Law No. 11 of 2020 concerning Job Creation in the Field of Income Tax, Value Added Tax, and Sales Tax on Luxury Goods, as well as General Provisions and Tax Procedures ( PMK 18/2021 ).
Administrative sanctions in the form of fines are generally imposed on taxpayers for violations related to their tax reporting obligations. By the explanation of Article 7 paragraph (1) of the KUP Law, the imposition of administrative sanctions in the form of fines is aimed in the interests of orderly tax administration and increasing taxpayer compliance in fulfilling the obligation to submit a tax return (SPT).
Administrative sanctions in the form of fines can be considered as retribution for harm to the state because the taxpayer does not fulfill his tax obligations.
In the UU KUP, there are 5 types of actions that are subject to administrative sanctions in the form of fines. First, not submitting the SPT within the stipulated period. Based on Article 7 paragraph (1) of the KUP Law, there are 4 types of fines as follows:
- IDR 500,000 for late submission of VAT Period SPT;
- IDR 100,000 for late submission of other Periodic SPT;
- IDR 1 million for late submission of the Annual Income Tax Return for corporate taxpayers; and
- IDR 100,000 for the Annual SPT of an individual taxpayer.
However, 8 certain situations cause the above administrative sanctions in the form of fines to not be applied. Based on Article 7 paragraph (2) of the KUP Law, the eight things that cause administrative sanctions for fines cannot be imposed are as follows:
- an individual taxpayer who dies;
- individual taxpayers who are no longer conducting business activities or independent work;
- individual taxpayers who are foreign citizens (WNA) and no longer live in Indonesia;
- permanent establishment (BUT) which no longer conducts business activities in Indonesia;
- corporate taxpayers who are no longer conducting business activities but have not been disbanded by applicable regulations;
- treasurer who does not make any more payments;
- taxpayers affected by the disaster, the provisions of which are regulated in the regulation of the minister of finance; or
- other taxpayers who are regulated based on the regulation of the minister of finance.
Second, taxpayers voluntarily disclose the untruth of the data reported in the SPT and no investigation has been carried out. This is regulated in Article 8 paragraph (3a) of the KUP Law with the threat of administrative sanctions in the form of a fine of 100% of the amount of underpaid tax.
Third, based on Article 14 paragraph (1) letters d and e of the KUP Law, 2 types of violations are subject to administrative sanctions of a fine of 1% of the tax base as follows:
- taxable entrepreneurs (PKP) who do not make or are late in tax invoices; and
- PKP has been confirmed as PKP and does not fill out a complete tax invoice.
Fourth, the taxpayer’s objections which are rejected or partially granted by the tax authorities or tax courts are subject to administrative sanctions or fines. The administrative sanction of a fine is imposed at 50% of the total tax based on the decision of the objection minus the tax that has been paid before filing an objection. This is as regulated in Article 25 paragraph (9) of the KUP Law.
Fifth, by Article 27 paragraph (5d) of the KUP Law, a taxpayer’s appeal that is rejected or partially granted is subject to administrative sanctions in the form of a 100% fine. The administrative sanction of the fine is calculated from the amount of tax based on the appeal decision minus the tax payment that has been paid before applying.