UNDERSTANDING TAX
Tax is a means of equal distribution of citizens’ income and a source of state development funding for the government. So in the long run the general public can enjoy the effects of this development. For example, if you pay the highway tax, then you will enjoy the benefits of highway repair in your area. Taxation according to some experts: Prof. Dr. Adriani tax is a contribution to a forced state, which is owed by taxpayers to pay it according to regulations by not getting a return that can be directly appointed. Prof. DR. Rachmat Sumitro, SH tax is a public contribution to the state treasury (the transfer of wealth from public treasury to the government sector based on the law) (can be forced without receiving lead service (achievement achievement) which can be directly shown and used to finance public expenditure. Based on the Law No. 28 of 2007 Based on Article 1 number 1 of Law No. 6 of 1983, which was later refined by Law No. 28 of 2007 concerning general provisions and taxation procedures, tax is “a mandatory contribution to the state owed by individuals or entities that are Forcing based on the law, by not getting reciprocity directly and being used for the country’s needs for the greatest prosperity of the people ”A. TYPES OF TAXES There are several types of taxes collected by the Indonesian government from taxpayers. This tax can be reviewed from several aspects namely based on the collection system, based on the agency p emungut and based on its nature. 1. Taxes based on the collection system From the method of collection, taxes can be divided into 2 namely direct and indirect taxes. Direct tax is a tax that must be borne by the taxpayer himself and cannot be transferred to other parties. This tax is paid periodically based on a tax assessment letter made by the tax office. This tax assessment letter has a description of the amount that must be paid by the taxpayer. Examples of direct taxes are Income Tax (PPh), Land and Building Tax (PBB). So you cannot hand over taxes from your income to your friends or relative. Indirect tax (Indirect Tax) is a tax whose payments can be transferred to another party. This tax is charged based on certain events or activities, so it is not paid regularly. The government collects this tax if the event occurs by the taxpayer. Examples of indirect taxes are sales tax on luxury goods, Value Added Tax (VAT), stamp duty, and excise. So if you sell luxury goods, then you can transfer sales tax on luxury goods to the buyer. 2. Taxes based on collecting institutions Based on their collecting institutions, taxes can be categorized into 2 namely state taxes and local taxes. State (central) tax is a tax collected by the central government. This tax collection is carried out through agencies such as the Director General of Taxes, the Director General of Customs and Excise, as well as tax inspection offices spread throughout Indonesia. Examples of state taxes are income tax, value added tax, stamp duty, import duty, excise tax, land and building tax, oil and gas tax, land acquisition and building tax. Local (local) tax is levied by the local government (provincial, municipal, district), and the results are used to finance the needs of regional households in general. Regional taxes at the provincial level are managed by the Tk regional revenue agency. I, while at the district or municipal level it is managed by the level II regional revenue agency. According to the law. No. 18 of 1997, concerning “regional taxes and regional user fees”, as amended by Law no. 34 of 2000.
the types of local taxes are: 1. Regional tax level I / province consists of • Taxed motor vehicles and vehicles on water, the tariff is 5% • Fees for the transfer of the name of motor vehicles and vehicles on water, 10% tariff • Fuel tax on motor vehicles, dance 5% • Tax collection and utilization of ground water and surface water, the tariff is 20% 2. Local level II / district or municipal tax, consisting of: • Hotel tax, dance 10% • Restaurant tax, 10% tariff • Entertainment tax, 35% charge • Billboard tax, 25% charge • Street lighting tax, 10% charge • C class excavation collection tax, 10% charge • Parking tax, 20% fee 3. Tax based on nature In terms of nature, taxes can be classified into 2 types namely subjective and objective taxes. Subjective tax is tax that is based on taxpayer conditions. So the size of the amount of tax will depend on the ability of taxpayers. Examples of these taxes are income tax, wealth tax. Objective tax is tax that is taken based on the condition of the object without regard to the condition of the taxpayer. So this tax is more related to the object and calculated based on the object. Examples of objective taxes are import taxes, motor vehicle tax, stamp duty, import duties, value added tax. B. TAX BENEFITS AND FUNCTIONS Of all the above tax uses, this tax function can be divided into: 1. Budgetary function As explained above, that taxes are a source of state revenue, then taxes serve to pay for state expenditures. For the country’s development, large expenditures such as national development and other costs cannot be avoided. Therefore, the state must ensure a balance between these expenditures with state revenues through tax dollars. 2. The tax regulating function can also function to regulate the economic growth of the Indonesian state. With government policy, taxes will indirectly help the economy of the country and its people. Examples such as to protect domestic production, the government increases the price of import duties for products from abroad. Thus, the people do not need to worry about intense price competition with foreign products. Another example with tax relief, the government can attract capital investment both domestically and abroad so that the Indonesian economy is more productive. 3. The function of stability With taxes, the government can carry out its policies relating to the stability of the country’s economy. So taxes can serve to control inflation. The government can regulate the amount of money in circulation by collecting tax or using tax effectively and efficiently. With an increase in taxes, the money supply will decrease so inflation will not occur. Conversely, if the country’s economic conditions are deflationary, the government can reduce taxes. 4. The function of income redistribution (equalization) Tax also functions as an even distribution of public income with the aim of happiness and welfare of the community. Taxes can be used to finance public interest and development so as to create new jobs, which will ultimately help the community’s income. From all of these functions, you as a society can enjoy various benefits. Some of the tax benefits are food subsidies, fuel subsidies, public transportation, public facilities such as roads, bridges, schools, hospitals, new jobs from investment, assistance for unemployment, electricity, water and waste management, as well as many other benefits . C. TAX COLLECTION SYSTEM There are three tax collection systems: 1. Office Assessment System Is a tax collection system where the authority to determine the amount of tax that must be paid by taxpayers is on the tax collection apparatus. This system is often called the “SKP system” and is generally applied to direct taxation. 2. Self Assessment System Namely a tax collection system where the authority to calculate the amount of tax that must be paid by the taxpayer is at the taxpayer. 3. With Holding System Namely a tax collection system where the authority to determine the amount
the tax to be paid by the taxpayer is not on the tax collection apparatus or the taxpayer, but rather a third party appointed by the minister of finance. D. ARISING AND DELETION OF TAX PAYMENTS 1. Increment of Tax Debt According to formal teachings, tax payable arises due to a Tax Assessment Letter (SKP). Whereas based on material teachings, tax debt arises because of the law. 2. Write Off Tax Debt a. Payment of tax debt attached to taxpayers will be removed because payments are made to the state treasury or other place designated by the government b. Compensation Occurs if the taxpayer has an overpayment of taxes. This excess payment can be compensated as tax payable. c. Expiry This means billing expiration. d. Exemption from tax debt does not end in the proper sense, but because it was eliminated. e. Write-off Write-off This tax debt is the same as exemption, but it is given because of the taxpayer’s financial condition. E. REFORM IN TAXATION 1. Background Underlying the reform of the taxation laws is the incompatibility of existing laws with the personality of the Indonesian people because the laws were made by the colonial. 2. The National Tax Law reform has been in place since 1983, with the passing of 5 tax laws, or better known as national tax laws. The five Laws are: a) Law No. 6 of 1983, concerning “General Provisions and Tax Procedures” b) Law No. 7 of 1983, concerning “Income Tax” c) Law No. 8 of 1983, challenge “Value Added Tax” d) Law No. 12 of 1985, concerning “Land and Building Tax” e) Law No. 13 of 1985, concerning “Stamp Duty” 3. Differences between the Old Act and the New Act a. Characteristics and old taxation style: 1. The responsibility of collection lies with the government 2. The administration system depends on the taxation apparatus b. Characteristics and features of the national taxation system: it is a form of participation in national development. The responsibility for implementing tax is on the people themselves, but they are given confidence in determining their own taxation. 2002, various steps in implementing good governance. As an implication, a Large Taxpayer Service Office was formed as a pilot project. After that the Middle Tax Service Office and the Primary Tax Service Office were formed. F. INTERNATIONAL TAX LAW 1. Definition a. Prof. Dr. Ottman Buhler, differentiating in broad and narrow sense. In the narrow sense is the legal norm of disputes based on inter-national law, while in the broad sense of law between nations plus the object of dispute law. b. Dr. P. Verloren van Thermat, defines international tax law as an overall norm (customs and international treaties) that limits the sovereignty of a State in collecting taxes. In the Anglo Saxon State the notion of international tax law is distinguished by: 1) National External Tax Law 2) Foreign tax law 3) International Tax Law 2. Sources of international tax law: a. National tax law, i.e. tax regulations b. Treaty, i.e. tax agreement with other countries c. Judge’s Ruling 3. Purpose of International Tax Law Is aimed at avoiding the symptoms of double taxation. Ways that can be done are: a. Unilateral, where the state regulates the prevention of double taxation in its tax laws. Such as: 1) Exemption, based on pure territorial principle or restricted territorial principle 2) Tax credit, (direct tax credit, indirect tax credit, fiction tax credit) b. Bilateral, known as tax treaty c. Multilateral, eg general agreement on tariffs and trade 4. Tax Subjects and Tax Objects in International Taxes Subjects can be divided into 2: Domestic Taxes and Foreign Tax Subjects. Type of tax object: tax object with domestic sources, and with foreign sources. 5. Double Tax Can be distinguished from national and international double taxation. To avoid international double taxation, an agreement commonly called “tax treaty” was made. The tax treaty can be grouped into: a. mention the type of tax but not define it, because it often leads to misinterpretation. b. include the tax definition and the name of the taxes c.
mention the name of the tax which also applies to taxes that have the same tax object in the tax treaty: 1) income from fixed or immovable property 2) income from business 3) income from shipping or air transportation 4) dividends 5) interest 6 ) royalties 7) profits from the sale of assets 8) income from work expenses 9) income from work 10) salaries for directors 11) income for artists, artists, athletes 12) pension money and labor social security 13) civil servant income 14) student income or students 15) other income G. Sources of Law and Development of Tax Law in Indonesia 1. Sources of Material Law Ie the factors that help the formation of the law (tax law), for example factors in the form of social relations, politics, economics, and International Relations. 2. Formal Legal Sources That is the source from which a rule of law obtains legal force or ways that cause the rule of law to be formally applied. For example, statutory regulations (the principle of Pancasila, 1945 Constitution, etc.), customs, treaties (Tax Treaty), Jurisprudence, and Doctrine. However, in the tax law there are no unwritten legal sources because based on the notion of tax law, the rules of tax law are only born because they are written and are not done in a customary manner. As such, customs as a source of law are generally unknown in tax law. Pancasila is a source of basic national law that animates the legislation in the field of taxation. Pancasila has the position of a testing tool against written legal sources, whether it is appropriate or even contrary to Pancasila. Pancasila is a benchmark to determine the truth of the legal substance contained in each Tax Act. Sources of written tax law consist of: 1. The 1945 Constitution Prior to the amendment to the 1945 Constitution, the provisions regarding taxes are regulated in Article 23 paragraph (2) of the 1945 Constitution which reads “all taxes for state needs must be based on the law.” This provision contains the principle of legality which places authority on the state to collect taxes if the state needs it, but on condition that it must be based on law. There is no tax without agreement between the people through their representatives in the House of Representatives and the Government which is regulated by law or “No taxation without representation”. After the 1945 Constitution was amended, it turned out that the provisions concerning tax underwent a very principal change. This can be seen in Article 23A of the 1945 Constitution which reads “compulsory taxes and charges for state needs are regulated by law.” There is a principle change because not only taxes, but compulsory levies must also be regulated by law. This is a positive development so that there is no arbitrariness in imposing imposing levies on citizens. 2. Taxation Agreements Each country has different tax regulations with other countries that make it easy to impose international double taxation, thus creating a high burden on taxpayers. To overcome this, the countries concerned have an international tax avoidance agreement so that taxpayers from each country concerned are not subject to double taxation. In addition, tax agreements can also prevent tax avoidance and tax evasion. The taxation agreement made by Indonesia is in the form of a Double Tax Avoidance Agreement (P3B), both bilateral and multilateral agreements, concerning tariffs on interest, dividends, royalties, and so on. 3. Tax Jurisprudence Tax jurisprudence is a court decision regarding a tax case that includes tax disputes and tax crimes that have permanent legal force. Court decisions related to tax disputes are Tax Court Decisions or the Supreme Court that has legal force binding on the parties to the dispute, while court decisions related to tax crime are the Court Decisions in the General Judicial Environment and the Supreme Court which has binding legal force . 4. Taxation Doctrine
In order for doctrine to be a source of tax law, its substance must be in the context of the tax law proposed by tax law experts, bearing in mind that the legal substance contained in tax law has very principal differences from other laws because tax law has its own characteristics. The opinion of tax law experts, for the time being, cannot be expected to support the development of tax law. This is due to the scarcity of tax law experts who can provide their own style in the development of tax law. The authority of tax collection lies with the government. In legal countries, everything must be determined in law. As in Indonesia, tax collection is regulated in Article 23A Amendments to the 1945 Constitution that taxes and other levies that are coercive for the purposes of the state are regulated by law. On the basis of the law it is intended that the tax is a transfer of wealth from the community to the government for the needs of the state by not getting direct contra. Wealth transfer can also occur due to grants or the possibility of robbery or robbery. Therefore, all actions which place a burden on the people as an example of tax must be determined by a law that has been approved by the House of Representatives. Furthermore, the entire regulations covering the government’s authority to take one’s wealth and hand it back to the public through the state treasury are included in the scope of the notion of tax law. Considering this regulation concerns the legal relationship between the state and individuals or entities that have obligations to pay taxes, tax law is a public law. Tax law also regulates legal relations between the state and persons or legal entities that have a broad scope, not only examining the conditions in society associated with taxation and formulating and interpreting the rule of law by taking into account the economy and the state of society, the tax law contains elements of criminal and judicial law as contained in Act Number 17 of 1997 concerning the Tax Dispute Settlement Agency, which took effect on January 1, 1998. Subsequently updated with Law Number 14 of 2002 concerning Tax Courts in effect from the date of promulgation namely 12 April 2002. Globally that law is divided into two major groups namely Public Law and Civil Law. Public Law covers Criminal Law, Administrative Law, and Administrative Law. Civil Law covers Civil Law in the strict sense (BW ＝ Burgelijke Wetboek) and Commercial Law (WK ＝ Wetboek Van Koophandel). Public law is the law that governs the relationship between the government and its citizens, while in Civil Law is the law that regulates the relationship between individuals in the community. State Administrative Law or State Administrative Law is a series of legal regulations that govern all ways of working and the exercise of authority directly from state institutions and their apparatuses in carrying out their respective duties. The position of Tax Law is part of the State Administrative Law. But tax law experts like Prof. DR. P. J. A. Adriani wants Tax Law to stand on its own which is a science apart from State Administrative Law on the grounds that the Tax Law has other duties compared to administrative law. However, another view that the independence of the Tax Law is less precise because it appears that the Tax Law is free from other laws. H. TAXIFICATION OF TAXES AND PRINCIPLES OF TAX COLLECTION In this case, the principles of tax collection and reasons for the taxation of the population will be stated. The principle of tax collection principles: a. The state insurance theory has the right to collect taxes from the population because according to this theory the state protects all people and the people pay a premium to the state. b. Theory of interest That the state has the right to collect taxes because the country’s population has an interest in the state, the greater the interest of the population to the state, the greater the tax that must be paid to the state. c. Devotional Theory Teaches that population is part of a country therefore the population is bound to the state and obliged to pay taxes to the state in the sense of serving the state. d. Pikul style theory This theory suggests that in the case of tax collection the government pays attention to the taxpayer style of taxpayers. e. Buying style theory According to this theory the justification of tax collection lies in the effect of tax collection. For example, the availability of sufficient funds to finance public expenditure, because the effect is good from the state’s attention to the community, then taxation is also good. f. Development theory For Indonesia the most appropriate justification of tax collection is development in the sense of a just and prosperous society Besides that there are also the principles of tax collection such as: • Juridical principles which state that tax collection is based on laws • Economic principles that emphasize collection taxes should not hinder the production and economy of the people • The financial principle emphasizes that the expenses to collect taxes must be lower than the amount of tax collected. Tax collection principles: According to the Saligman Era there are four tax collection principles: • Fiscal principles • Administrative principles • Economic principles • Ethical principles