Procedures for the Implementation of Tax Collection for Outstanding Tax

On 27 November 2020, the Ministry of Finance issued Regulation No. PMK-189/PMK.04/2020 (“PMK-189”) which governs the Procedures for the Implementation of Tax Collection for Outstanding Tax.

The main points of PMK-189 are summarized as follows:

  • Every Taxpayer is obliged to pay Tax Payables in accordance with the provisions of the laws and regulations.
  • Tax payables as mentioned above include:
    1. Income Tax;
    2. Value Added Tax on Goods and Services;
    3. Luxury Goods Sales Tax;
    4. Sales Tax;
    5. Stamp Duty; and
    6. Land and Building Tax.
  • In the event that the Taxpayer fails to pay its outstanding tax debts after the relevant payment due dates, the government will initiate a series of tax collection actions.
  • No Tax Collection Actions Remarks
    1. Issuance of warning letter Seven (7) days after due date of tax payable
    2. Issuance and notification of distress warrant If a taxpayer still fails to pay its tax debts within 21 (twenty-one) days of a warning letter being issued, officials will issue a distress warrant, which the taxpayer will be notified of by a tax bailiff
    3. Confiscation of a tax bearer’s assets

    Confiscations will be initiated if a taxpayer has still not paid its tax debts within 2 x 24 hours of taking receipt of the relevant distress warrant.

    It is important to note that officials will first implement the blocking of assets prior to any confiscation if the relevant tax bearer’s assets have been deposited with financial services institutions and/or other entities operating within the banking,

    capital market and insurance sectors.

    4.

    Announcement of auction and auction of confiscated goods

    and/or

    The use, sale and/or transfer of confiscated goods which are not sold through auctions

    If a taxpayer has still not paid its tax debts and the tax collection fees within 14 days of the date of the relevant confiscation, then officials will:

    1.Announce the auction of the confiscated goods. Any such auction should be held within 14 days after said announcement being made; and/or;

    2.Use, sell and/or transfer the confiscated goods if they are not sold through auction.

    5. Proposal for the prevention of a tax debtor leaving Indonesian territory

    After the auction and/or the use/sale/transfer of confiscated goods, officials may propose that tax bearers be temporarily prevented from leaving Indonesian territory.

    This prevention may take place after the issuance of a distress warrant without requiring the issuance of any order letter for the confiscation or sale of the relevant confiscated goods. This only applies under certain circumstances (e.g. the occurrence of indications of bankruptcy or dissolution).

    6. Imprisoning the tax bearer

    After a tax bearer has been prevented from leaving Indonesian territory, the government may initiate a debt imprisonment process 30 days prior to the end of the relevant prevention period or its extension.

    However, debt imprisonment may be conducted within 14 days of any distress warrant being notified if there are indications of bankruptcy or dissolution or if the expiration date of the relevant tax debts is approaching.

    7. Issuance of immediate and complete billing warrant

    Tax bailiffs may also implement immediate and complete billing based on the relevant warrant under certain circumstances (e.g. the occurrence of indications of bankruptcy or dissolution).

    Any such immediate and complete billing warrant may be issued under the following circumstances:

    1. Prior to the relevant payment due date;
    2. Without being preceded by a warning letter;
    3. Within 21 days of a warning letter being delivered; or
    4. Prior to the issuance of a distress warrant.

This regulation became effective on 27 November 2020.

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