pro-visioner.com – The Legal Way to ‘Wash Money’ , State promises to give big discounts to taxpayers who ‘launder their money’
in the field of competency-based coaching and human resource development.
Entering the first quarter of 2023, the public was shocked by the news of the fantastic amount of wealth owned by officials within the Ministry of Finance, which according to lay eyes is very unnatural, so it is indicated that their wealth was obtained by “washing money” through various means.
Money laundering is an attempt to hide or disguise the origin of wealth obtained from criminal acts as referred to in Law Number 15 of 2002 concerning the Crime of Money Laundering. Money laundering is clearly illegal, because the wealth owned and disguised or hidden by the perpetrators comes from criminal acts of corruption, bribery, drugs, psychotropic substances, labor smuggling, migrant smuggling, in the banking sector, in the capital market sector, in the insurance sector, customs, excise, trafficking in persons, illicit arms trafficking, terrorism, kidnapping, theft, embezzlement, fraud, money forgery, gambling, prostitution, in the taxation sector, in the forestry sector, in the environmental sector, and in the marine and fisheries sector.
However, there are actually “money laundering” practices that are legal and even encouraged by the state. The difference is that the money used in “money laundering” here comes from legitimate sources of income, and is spent on corporate social responsibility funds to the wider community.
Often large corporations spend these social responsibility funds on education, social services, disaster relief, public facilities and many other useful things for the benefit of the wider community. The state even promises to give a big discount to taxpayers who “launder their money” in the field of competency-based human resource development.
It has become the general view of the public and taxpayers that tax is a burden or obligation-a little[1] much feels heavy despite the government’s awareness movement to all levels. That is a fact that cannot be covered up by the government in any country that collects taxes on the income owned by its citizens.
The government apparently provides various fiscal incentives to improve the quality of human resources (HR), as well as to increase research and development (R&D) activities. Tax deductions or super tax deductions are given to a number of companies that provide vocational education and training.
Corporate Income Tax (PPh) cuts are given ranging from 60 percent to 300 percent, for pioneer industries, namely industries that have extensive linkages, provide high added value and externalities, introduce new technologies, and have strategic value to the national economy.
The above incentives are regulated in Government Regulation (PP) Number 45 of 2019 concerning Amendments to Government Regulation Number 94 of 2010 concerning Calculation of Taxable Income and Payment of Income Tax in the Current Year. The regulation, which was signed by President Joko Widodo on June 25, 2019, emphasizes that companies that get the facility are those that do not get the facility under Article 31A of the Income Tax Law.
In the following, the author summarizes a number of facts related to the massive tax provision by the government
Corporate Income Tax (PPh Badan) deductions are given ranging from 60 percent to 300 percent, for pioneer industries, namely industries that have extensive linkages, provide high added value and externalities, introduce new technologies, and have strategic value to the national economy.
The above incentives are regulated in Government Regulation (PP) Number 45 of 2019 concerning Amendments to Government Regulation Number 94 of 2010 concerning Calculation of Taxable Income and Payment of Income Tax in the Current Year. The regulation, signed by President Joko Widodo on June 25, 2019, emphasizes that companies that get the facility are those that do not get the facility under Article 31A of the Income Tax Law.
In the following, the author summarizes a number of facts related to the massive tax provision by the government
Industries that get a 60 percent corporate income tax cut
The regulation states that domestic corporate taxpayers who make new investment or business expansion in certain business fields, namely labor-intensive industries, can be given a corporate income tax (PPh) facility in the form of a net income reduction of 60 percent of the amount of investment in the form of tangible fixed assets including land used for main business activities, which is charged within a certain period of time.
Industries that get 200 percent corporate income tax deduction
Then domestic corporate taxpayers who organize work practice, apprenticeship, and/or learning activities in the context of fostering and developing certain competency-based human resources, can be given a maximum gross income reduction of 200 percent of the total costs incurred for work practice, apprenticeship, and/or learning activities.
The competency development in question is to improve the quality of the workforce through strategic work practice, apprenticeship, or learning programs to achieve workforce effectiveness and efficiency as part of human resource investment, and also to meet the structure of labor needs required by the business world and the industrial world.
Industries that get a 300 percent corporate income tax rebate
Domestic corporate taxpayers conducting certain research and development activities in Indonesia, according to the regulation, can be given a maximum gross income reduction of 300 percent of the total costs incurred for certain research and development activities in Indonesia that are charged within a certain period of time.
The specific research and development activities referred to are research and development activities carried out in Indonesia to produce inventions, produce innovations, master new technologies, and transfer technology for industrial development to increase national industrial competitiveness.
Super tax deduction believed to improve the quality of human resources
The provision of super tax deduction fiscal incentives is believed to be able to encourage the manufacturing industry sector to be actively involved in preparing quality human resources (HR) and increasing research and development (R&D) activities.
The PP on the provision of tax incentives to business actors who contribute to the national economy will come into force on the date of promulgation by Minister of Law and Human Rights Yasonna H Laoly on June 26, 2019.
The encouraged competencies include 127 types of competencies for students, education and education personnel at vocational high schools or madrasah aliyah.
A total of 268 types for students, educators, and education personnel at vocational diploma program colleges. As well as 58 types for individuals, trainees, instructors, and coaching personnel at vocational training centers.
The range of competencies covers various sectors including manufacturing, health, agribusiness, tourism, creative industries, and the digital economy.
This tax incentive is to encourage the involvement of the private sector to actively develop the quality of Indonesia’s human resources through job training. To obtain this facility, taxpayers only need to submit a notification through the online single submission system.
Related to the massive discount or super deduction, there are three targets that the government wants by involving the industry or taxpayers related to vocational education, namely
Certain competencies for students, educators, and / or education personnel at vocational high schools or vocational aliyah madrasas
Certain competencies for students, educators and / or education personnel at higher education diploma programs in vocational programs
Certain competencies for individuals as well as trainees, instructors, and/or coaching staff at vocational training centers.
According to the author, so far the main problem in education is the large gap between job owners and job seekers. This means that there is a lack of synchronization between the needs of employers and the qualifications possessed by job seekers. Many job seekers are not competent and credible, even though they have to enter the workforce, be it industry, trade or the service sector. Therefore, it takes an extraordinary breakthrough to solve this problem. And the moment is found when the country also needs tax revenue.
Initially, it looks detrimental to the state because revenue is definitely reduced from the tax sector, but if we use investment glasses, of course it is a common thing if the initial conditions for the start of an “investment” will incur a lot of costs that can lead to losses at the beginning of the investment. However, make no mistake, the most expensive investment and has a high valuation in the future is investment in education.
This PP and PMK (Minister of Finance Regulation No. 128/ PMK.010/2019) arrived at the right time, albeit very, very late. Our country has been missed and left far behind by our ASEAN neighbors Vietnam and Thailand, and even Cambodia has done the same thing before us. As a result, many foreign manufacturers or foreign investments enter the country compared to our country. There should be no regrets or late words for optimism in the state.
Next, the author will illustrate how the discount is calculated on the profit generated by the company or taxpayer.
Example 1:
PT X conducts work practice and apprenticeship activities with the following fiscal financial statements:
Gross income Rp 500.000.000,00
Non-work practice and apprenticeship expenses Rp (400,000,000.00)
Work practice and apprenticeship expenses Rp (20,000,000.00)
Net income (loss) before facility Rp 80,000,000.00
Additional gross income reduction Rp (20,000,000.00) Taxable income Rp 60,000,000.00
Additional gross income reduction that can be utilized by PT X amounting to Rp 20,000,000.00 (100% x Apprenticeship Cost)
Example 2:
PT Y conducts work practice and apprenticeship activities with the following fiscal financial statements: Gross income of Rp 500,000,000.00
Non-practice work and apprenticeship expenses Rp (400,000,000.00)
Work practice and apprenticeship expenses Rp (60,000,000.00)
Net income (loss) Rp 40,000,000.00
Additional gross income deduction Rp (40,000,000.00)
Taxable income Rp 0.00
The additional gross income deduction that PT Y should be able to utilize is Rp60,000,000.00 (100% x Cost of work practice and apprenticeship). However, because the additional deduction causes a fiscal loss of Rp 20,000,000.00, the additional gross income deduction that PT Y can utilize is only Rp 40,000,000.00.
An example of the format of costs related to vocational activities that get a large discount is in the appendix of PMK No. 128 of 2019 concerning the Granting of Gross Income Deduction for the Implementation of Practical Work, Apprenticeship, and/or Learning Activities in the Context of Development and Development of Certain Competency-Based Human Resources, and can be downloaded on the website of the tax regulation provider.
Thus, hopefully, taxpayers are interested in obtaining the above discounts, especially since there is a promise of ease in the procedure and application for obtaining these discounts, which is simply through OSS or Online Single Submission that is integrated with all lines of bureaucracy.
