The Government has enacted the Minister of Finance Regulation No.15/PMK.03/2018 (“MoF-Regulation”) effectively as of February 12, 2018. This regulation is intended to Taxpayer who compulsory to conduct Recording and Bookkeeping. It regulates that during tax audit, if the Taxpayer did not or did not fully conduct the Recording or Bookkeeping that causes actual Gross Revenue (“Revenue”) is unnoticed, Tax Office will calculate the Revenue with other methods. The methods are as follows: Cash and Non-Cash Transactions; Source and Use of Funds; Units and / or Volume; Life Cost Calculation; Net Wealth Increase; Notice or Result of Examination of the previous Tax Year; Economic Value Projection; and Ratio Calculation. The Regulation only briefly describes the methods, the provisions of the details technical calculation will be stated in the Director General of Tax Regulation (“DGTR”).
Prior to the enactment of this MoF-R, in this circumstances (Taxpayer did not or did not fully perform Recording or Bookkeeping), there is a possibility that the calculations of Revenue are performed inconsistently, that may causes the tax base will be higher or lower than it supposed to be. This Regulation is considered as a solution for tax auditor in performing their duties. There is a possibility that the methods in the Regulation are inappropriate to implement, or there are other methods beyond of them that more precisely to implement. In this current regulation, it only mentions the methods which can be applied, but does not explain about the possibility of combination of several methods according to the Taxpayer conditions. It is possible that each method will generate different amount of revenue. For that reason, it is necessary to regulate which method will generate the most close to actual amount of the revenue. Hopefully, that the Director General of Tax Regulation (“DGTR”) will anticipate various conditions and applications of methods to provides legal certainty and fairness for Taxpayer.
Taxpayer needs to pay more attention to the implementation of this “DGTR” with due regard to the provision that this MOF Regulation applies when Taxpayer did not fully perform Recording or Bookkeeping and thereby causes the actual Revenue to be unnoticed. Taxpayer should ensure the Recording and Bookkeeping has been accordance with the provisions Article 28 of General Tax Provisions Law No. 16/2009. This MOF Regulation has not provided any measurement criteria that can clearly assess the condition of Taxpayer’s Records / Books. Later, it is expected that the measurement criteria can be stated in the Director General of Tax Regulation (“DGTR”) so that this regulation can be applied consistently and objectively.
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