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Tax amnesty confusion

Discussion in 'Owning Property in Bali' started by islandchef, Mar 21, 2017.

  1. islandchef

    islandchef New Member

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    Sorry if this post is not in the correct area but i am so confused.
    From what i understand & have been informed by our accountant is that the amnesty is not for those who have nothing to hide,ie, taxes are paid by company, i have an NPWP with no overseas property or other income, savings in my native country are not relevent as they are due taxes in that country.
    Now ,my confused Indonesian wife is being told by all friends & fmaily that we must pay tax on any cars, motorbikes we own, jewellery & household items....i cant believe this is true, basically like paying tax 2 times, when you purchase here & again now?
    Our residential home is in the name of my brother in law & the title states that it was purchased with our funds due to we did not make a pre nup,bad advice & therefore cannot own the home. Will this then be classed as an asset to him, even though the funds were provided by me?

    Even my wife goes to the tax office, she gets 2 different answers.
     
  2. davita

    davita Active Member

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    If you have an NPWP it is a requirement that you report all your assets like car, etc. What you report is up to you... for example an old rusty bike hardly qualifies. The whole idea is to assure the tax man you aren't hiding wealth. It doesn't mean you get taxed it just means it is reported as an asset.
    The same for your B in L if he is your nominee...the asset is the property which he, legally, should report. If the property transfer was paid, and annual property taxes paid, he doesn't owe any more, unless the property produced income.
     
    #2 davita, Mar 21, 2017
    Last edited: Mar 21, 2017
  3. Mark

    Mark Member

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    islandchef, there's possibly been more confusion around the tax amnesty than anything else I've ever come across in Indonesia. Putting aside the issue of the house for a moment, if you have been paying taxes on your income all this time and used your net of tax income to buy assets in Indonesia there is nothing to worry about. The tax amnesty allowed Indonesian taxpayers who accumulated assets from undeclared income to 'come clean' by declaring their assets and paying a small penalty to square things with the taxman. As to the house, davita correctly indicates that your BIL must report it as his asset, and may face questions about the income that he used to buy it. However, as Indonesian law exempts from income tax gifts between family members within one degree of lineage/relation, income tax should not be owing on this amount (i.e, there is one degree of blood relation between the economic unit of you/your wife and her brother). I know the money probably wasn't a gift but would be considered so by the taxman unless you have a formal loan agreement. The bottom line is that your accountant is correct and neither you, your wife or your BIL should have nothing to worry about.
     
    spicyayam likes this.
  4. islandchef

    islandchef New Member

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    Thanks for the advice & i agree that an amnesty is to be given the opportunity to come clean with little or no penalty but all the scaremongers have my wife scared that we have to pay a fortune in "tax"
    Thanks for the law regarding gifts, nobody has ever mentioned that & is definately something to follow up.
     
  5. Markit

    Markit Active Member

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    Law by hearsay... don't you love it?
     
  6. DenpasarHouse

    DenpasarHouse Member

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    Unfortunately, this is not correct. Once you become a Tax resident in Indonesia you must declare your worldwide income. So whatever interest you're earning on your savings needs to be declared (and I suppose the total amount of savings needs to be listed in the assets section of your Indo tax return).

    If your home country has a tax treaty with Indonesia the amount of tax you've already paid will be subtracted from the amount of tax Indonesia wants you to pay. However, Indonesia usually wants more tax than a developed country because the higher tax brackets usually kick in a lot lower.

    For example, if Indonesia wants 100 juta in tax but you've already paid 60 juta in your home country, then you'll only need to pay 40 juta to the Indonesian Tax department.

    This is actually true if you can't prove that the money you used to buy these things was gained legitimately and, if relevant, prove that you paid income tax on said money.

    All your significant assets should be listed on your, or your wife's, tax return. If they aren't, you'll need to go back and resubmit your tax returns to make sure they're up-to-date. I think it costs about Rp.100.000 per tax return to resubmit.

    Absolutely it will. He should have also written the amount of money he received from you as a gift on his tax return. But because it's a gift from his sister, it's not subject to income tax. (I'm not 100% on this, does "one degree of direct lineage" include siblings?)
     
  7. Mark

    Mark Member

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    Technically, this is good and correct advice. However, for the time being, it is something that is difficult to enforce, as Indonesia has no way of knowing the overseas assets/income of its residents unless self-reported. This will change in the next couple of years, however, as OECD agreements on information exchange between countries come into effect. All expats spending more than 183 days in Indonesia in any 12 month period are caught in this web, regardless of visa status, so be forewarned. There are over 100 countries signed up to the treaty at this point, and they will report into a database to which Indonesia as a signatory has access.

    From the info I've seen, siblings are included within the one degree of direct lineage rule - it's one relation up (parents), down (children) and 'sideways' (siblings). No uncles, aunts, nephews, nieces, grandparents, grandkids etc.
     
    DenpasarHouse likes this.
  8. spicyayam

    spicyayam Active Member

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    This is one of the best explanations I have read about the amnesty. Most of the articles in the English language press only made it more confusing.
     
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