Challenge and Solution

Transcription

1 Challenge and Solution Wahyu Winardi Deputy Director of VAT Regulation -Directorate of Tax Regulation I Directorate General of Tax (DGT) Ministry of Finance of Republic of Indonesia Seventh High Level Tax Conference For Asian Countries Tokyo, 5-7 April 2016

2 Subject 2

3 Indonesia s Tax Ratio (Trillion Rupiah) Tax Ratio Relatively Stagnant 12% GDP (Curent LCU) Tax Revenues (Inc. Customs & Excise) 8,229 7,419 9,084 10,543 6,447 5,606 4,949 3,951 3,339 2,774 2,296 12% 12% 13% 12% Tax Ratio 13% 11% 11% % 12% 12% 12% 1, , Sources: Statistics Indonesia & Directorate General of Taxes 3

4 Tax Ratio (%) Indonesia s Tax Ratio Among ASEAN Countries Cambodia Indonesia Lao PDR Malaysia Philippines Singapore Thailand Average Source: World Bank Sources: World Bank 4

5 Trillion Rupiah Trillion Rupiah Indonesia s Tax Structure Share of Tax Revenue By DGT Tax Revenues (Inc. Customs & Excise) Tax Revenue by DGT 1,500 1, Average 85% of Total Tax Revenue Structure of Tax Revenue (By DGT) Non Oil & Gas Income Tax VAT & Luxury Sales Tax Oil & Gas Income Tax Land & Building Tax Other Tax Sources: Statistics Indonesia & Directorate General of Taxes 5

6 Trillion Rupiah Trillion Rp Indonesia s VAT Structure 1,500 Share of VAT Revenue 1, % 42% Tax Revenues by DGT VAT Revenues VAT Structure % % 37% 36% Domestic VAT Import VAT Luxury Sales tax Import Luxury Sales Tax 100 Other VAT 50 2% 3% Sources: Statistics Indonesia & Directorate General of Taxes 6

7 Trillion Rupiah Indonesia s VAT Efficiency Ratio 12,000 VAT Efficiency Ratio 100% 10,000 90% 80% 8,000 70% 6,000 4,000 33% 37% 37% 39% 42% 34% 36% 37% 41% 47% 51% 60% 50% 40% 30% 2,000 20% 10% GDP (Curent LCU) 2,774 3,339 3,951 4,949 5,606 6,447 7,419 8,229 9,084 10,543 VAT Revenues VAT Efficiency Ratio 37% 37% 39% 42% 34% 36% 37% 41% 47% 51% 0% Sources: Statistics Indonesia & Directorate General of Taxes 7

8 Indonesia s VAT Efficiency Ratio INDONESIA & DEVELOPING COUNTRIES Singapura Croatia Mongolia Barbados Venezuela Thailand Paraguay Ghana Bulgaria Nigeria Sri Lanka Romania Indonesia Poland Slovak Republic Czech Republic Mauritania Togo Burkina Faso Uganda Congo Republic Guinea Gabon Zambia Madagascar 33% Source: OECD Factbook 2010: Economic, Environmental and Social Statistics (2011), Revenue statistics: Comparative tables, OECD Tax Statistics (database) and Rate of VAT/GST from The Modern VAT 0,0 0,1 0,2 0,3 0,4 0,5 0,6 0,7 8

9 Indonesia s VAT Efficiency Ratio INDONESIA & OECD COUNTRIES Canada Japan New Zealand Switzerland Korea Israel Australia Estonia Slovenia Luxembourg Hungary Turkey Netherlands Denmark Finland Austria Germany Czech Republic Portugal United Kingdom Greece Slovak Republic Mexico France Sweden Chile Poland Italy Belgium Ireland Norway Iceland Spain Indonesia 33% Source: OECD Factbook 2010: Economic, Environmental and Social Statistics (2011), Revenue statistics: Comparative tables, OECD Tax Statistics (database) and Rate of VAT/GST from The Modern VAT 0,0 0,2 0,4 0,6 0,8 1,0 1,2 1,4 1,6 9

10 TRILLION RUPIAH VAT Revenue - History Tax Reform 1985 Revamp VAT Administration Sales Tax Regime VAT Regime DGT Modernization 2002 VAT Law Amandement Political Reform 1998 VAT Law- Amandement

11 Shadow Economy Size of Shadow Economy in Asia-Pacific Countries (% of GDP) No Country Country Average 1999/ Australia China Hong Kong India Indonesia Japan Korea, Rep Malaysia New Zealand The Philippines Singapore Srilanka Taiwan Thailand 54.7 VAT Efficiency Ratio (Average ) Thailand Taiwan Srilanka Singapore The Philippines New Zealand Malaysia Korea, Rep. Japan Indonesia India Hong Kong China Australia % (Percentage) Source: New Estimates for the Shadow Economies all over the World, Friedrich Schneider, Andreas Buehn, and Claudio E. Montenegro,

12 Estimated Shadow Economy (Billion Rupiah) GDP , , ,04 Shadow Economy (25%) Shadow Economy (35%) , , , , , ,96 Country Estimated Percentage of GDP Advanced Countries 14 16% Emerging Countries Market Latin America, Central America, Africa Middle East, Developing Asia 32 35% > 40% 25 35% Not all acitivities in an Shadow Economy/Underground Economy is illegal, some of activities like hawkers are legal, however they are classified as Underground Economy. Shadow Economy consist of: 1. Informal Economy: activities that aren t monitored by the government and aren t taxed. 2. Illegal Economy: activities that are prohibited by law. 3. Unreported Economy: unreported, avoiding tax, often referred to as the cause of the tax gap 4. Unrecorded Economy: unrecorded because the government has not conducted a data collection, not because of tax evasion. Source: IMF Working Paper (WP/12/47) Inclusive Growth, Institutions, and the Underground Economy (2012), page 6-7 and calculated from GDP forecast 12

13 VAT Rate Corporate Income Tax Rate Personal Income Tax Rate Risk to Tax Evasion In ASEAN, Indonesia s tax rate is considered moderate. Tax Rate Comparison - ASEAN The tax regime and type of tax administration influence the decision of taxpayers to work in formal or informal sectors A distinct type of VAT evasion in Indonesia is crediting VAT from fictitious transaction VAT Rate Corporate Income Personal Income Tax Rate Tax Rate Average Vietnam Thailand Singapore Philippines Myanmar Malaysia Laos Indonesia Cambodia

14 Revamp VAT Administration System 2011 Improvement espt 2012 Controlled Registration Policy Re-registration of VAT Tax Payer (deleted Taxable Person ) 2013 Broaden the base of espt Tax Invoice Numbering System (e-nofa) E-Tax Invoice: Pilot Project Increase the Threshold (from 600 m to 4,8 b) 2014 e-tax Invoice Phase 1 (e-faktur) started July 1, 2014 Preparation of VAT Law Amendment Source: Road Map- Revamp the VAT administration system Directorate General of Taxes, MoF RI, Revamp the VAT administration system sixteen key initiatives support the transformation themes- Instituional Transformation Program MoF-RI Next step! 2015 E-Tax Invoice Phase 2 (mandatory for Java-Bali ) CRS Study & Collecting Data 2016 E-Tax Invoice Phase 3 (full implementation) Planning & Preparation of CRS 2017 Developing CRS System And Application VAT Law Amendment (Parliament approval) 2018 Cash Receipt System implementation 14

15 Implementation of e-tax Invoice Tax Invoice serial number Jan ma r 2013 Juli nov Jan Manual E-NoFa Juli Jan Juli Jan Juli Jan E-NoFa online via Web Channel Phase 1 Phase 2 Phase 3 Development Development Client Application Web Application Development ERP/ASP Selection method for taxable person obliged to use e-tax invoice Procedures: Regulation of MoF, Decision of DGT Tes t Piloting / Trial Applicatio n Certain Taxable person LTO, Jakarta Special Regional TO, Medium TO Taxable person Jawa,Bali All taxable person mandatory Public announcement &education E-Tax Invoice Data Base Management 15

16 Taxable Person Monitoring Program Taxable Person Monitoring Program is an application aimed to: Improve VAT Administration System Maintain Taxable Person Validity An Early Warning System of VAT Fraud 16

17 Cash Receipt System (CRS) Background to implement CRS: to capture cash economy 1611, 85% Transaksi Cash Transaction Tunai Transaksi Credit Card Kartu Transaction Kredit Transaksi Debit Card Kartu Transaction Debit 138, 7% 142, 8% Total credit card and debit card transactions in 2012 is Rp 280 trillion Source: Bank of Indonesia Year

18 Summary of VAT Administration Improvement How to increase revenue? Increasing VAT rate? Improving VAT Administration (e-administration) Implement Cash Register System Increase the treshold of Rp 4,8 b (ensure only large business with better accounting system need to register) Limiting or Getting rate of exemption Broadening the RUU base PPN (revised law and regulation) Improving VAT Monitoring System (e-monitoring) Audit E-Tax Invoice 18

19 Conclusion Indonesia s Tax Ratio is still considered low compared to other ASEAN countries Indonesian Government have to deal with Shadow Economy and VAT Fraud to increase tax revenue, reduce tax gap, as well as increase tax ratio 19

20 Thanks For Your Attention