Sunday, November 13, 2016

Minimize Tax Rates in Indonesia

Minimize Tax Rates
The change in tax rates of the Act No. 17 2000 into Law No. 36 in 2008, to help us create opportunities b to perform tax planning through the change. The changes are:
a. In accordance with the Law - Law No. 17 of 2000 (Valid until December 31, 2008) tax business entities as follows:

Income layer
Up to  Rp 50.000.000,-
Up 50.000.000,- s.d Rp 100.000.000,-
Up Rp 100.000.000,-

Decisions Changes (Effective January 1, 2009):
a. Single rate of 30%. Lowered to 28% in 2009, and to 25% in 2010.
b. For WP Board Sign Stock Exchange (40% of its shares are traded on the stock exchange) rates given 5% lower than it should be.
c. For entities that gross income up to Rp. 50,000,000,000 given a reduction of 50% than they should.
With perfected the tax laws, means the weaknesses in legislation and tax rules that have been overcome. This means that some "loopholes" in the tax laws has been largely unknown. But it should be remembered that no single article in the tax laws in Indonesia that apply that prohibits taxpayer makes tax management so that businesses manage tax obligations in financial management with a right to attempt to minimize the amount of tax payable is an act of legitimate and legal.

Fiscal Correction
Fiscal correction is a correction of tax calculations that result from differences in the recognition methods, benefits, and age, in calculating the profit commercially or with fiscally. Fiscal correction is done because of the difference between profit or loss according to calculations commercial accounting with the accounting fiscal (by Act No. 10 of 1994 and Act No. 17 of 2000), before calculating the tax payable, advance profit / loss of commercial the corrections must be made fiscal accordance with Act No. 17 of 2000.
Thus, for the purposes of taxation the taxpayer does not have to make the double bookkeeping, but enough to make the bookkeeping by the Financial Accounting Standards (GAAP), and at the time of filling Annual Income Tax Return must be subjected to fiscal corrections. The fiscal correction is applied to both the income and the costs (deduction from gross income).
Kind of fiscal correction here is kind of - kind of difference between commercial accounting with fiscal provisions (Act No. 10 of 1994 and Act No. 17 of 2000). In general there are two differences in both income and expense recognition between commercial and tax accounting (fiscal) which caused the fiscal correction,:
1. Permanent Differences. Is the difference in income and expense recognition both among commercial accounting with the provisions of Income Tax Act permanent means that the fiscal correction would not be considered taxable income next tax year
2. Different Time. Is the difference in income and expense recognition both among commercial accounting with the provisions of Income Tax Law temporary means that the fiscal correction will be applied against taxable income subsequent taxation years. In terms of recognition of revenue correction for the time difference occurs because Admission cash basis earnings for more than one year. In the commercial accounting of income shall be allocated in accordance with the time of acquisition in accordance with the principle of matching costs with revenue. Meanwhile, according to the Income Tax Act, the income must be recognized at once upon receipt.

The correction of the timing differences of income will cause a positive correction, when earnings are acceptable and will lead to a negative correction in subsequent years. This will lead to a positive correction on the taxable income will increase, while a negative correction in the following years will lead to the taxable income will be reduced. The correction of the time difference correction costs can lead to positive or negative correction depending on the method used.
a. Positive correction. Fiscal correction resulting reduction in costs have been recognized in the income statement as commercial becomes smaller when viewed in the fiscal, or which would result in the addition of taxable income. positive fiscal correction are:
a) Costs incurred for the purposes which shareholders
b) Establishment of or additions to reserves
c) Expenditures in kind
d) donations or aid
e) Income Tax
e) An administrative sanction (taxes), depreciation / amortization, and others - others.
b. Negative corrections. Fiscal correction that resulted in the additional costs have been recognized in the income statement commercially, so the greater when viewed in the fiscal, or which would result in a reduction of taxable income. Such negative fiscal correction Depreciation / amortization, deferred income recognition, and others - others
Penyustan correction can cause negative or positive depending on the calculation, any larger or even smaller.