On 22 December 2021, the Minister of Finance of the Republic of Indonesia issued Regulation No. 196/PMK.03/2021 (“PMK-196/2021”) concerning the Implementation Procedures of the Taxpayer Voluntary Disclosure Program (“VDP”). PMK-196/2021 came into force on 23 December 2021. As stipulated in the Law on Harmonization of Taxation Regulations (UU Harmonisasi Peraturan Perpajakan – “UU HPP”), the VDP will be effective from 1 January 2022 to 30 June 2022.

The VDP is an opportunity provided to Taxpayers to voluntarily disclose undeclared income tax obligations and settle the obligations through payment of income tax based on disclosure of assets. Highlights of PMK-196/2021 can be divided into two policies, as follow:

1. Policy I: Taxpayers (Corporate and Individual) – Disclosure of Net Assets Undeclared or Underdeclared in the 2016 Tax Amnesty Statement Letter
   1. The eligible Taxpayers are those who participated in the 2016 Tax Amnesty program based on the Law on Tax Amnesty.
   2. The Taxpayers (Corporate and Individual) may disclose additional net assets that were undeclared or underdeclared in the 2016 Tax Amnesty Statement Letter, provided that the Director General of Tax (“DGT”) has not found data and/or information regarding the net assets.
   3. Net Assets is defined as the value of Assets minus the value of Debt/Liability for the acquisition period from 1 January 1985 to 31 December 2015.
   4. The criteria of Individual Taxpayer who are eligible to enjoy the Voluntary Disclosure Program are as follow:
      • Not under a tax audit and/or preliminary investigation for 2016 up to 2020 fiscal year;
      • Not under a tax crime investigation, court process on tax crimes, or serving sentences for tax crimes.
      • Has a Tax ID Number (NPWP) and pays the Final Income Tax for the disclosure of assets in the VDP;
      • Has submitted the Individual Income Tax Return for Fiscal Year 2020; and
      • Revokes the application of tax overpayment refund; reduction or abolishment of administrative sanctions; reduction or cancellation of incorrect tax assessment notice (SKP); Reduction or cancellation of incorrect tax collection notice (STP); Objection; Correction; Appeal; Lawsuit; and/or Judicial Review related to 2016 up to 2020 Fiscal Years.
   5. The undeclared/underdeclared Net Assets are considered as additional income acquired in the 2020 Fiscal Year and subject to Final Income Tax with certain rates depending on the conditions of the Net Assets as follows :
      

      	Rate	Conditions
      Net Assets situated in Indonesia	6%	Invested in: -Renewable Natural Resources or Energy business sector within Indonesia, and/or Government securities
      	8%	Not invested in: -Renewable Natural Resources or Energy business sector within Indonesia, and/or Government securities
      Assets situated overseas	6%	-Repatriated to Indonesia, and -Invested in the Renewable Natural Resources or Energy business sector in Indonesia, and/or Government Securities
      	8%	-Repatriated to Indonesia, and -Not invested in the Renewable Natural Resources or Energy business sector within Indonesia, and/or Government Securities
      	11%	Not repatriated to Indonesia

      Failure to meet the conditions within the specified time will incur additional Income Tax ranging   from 3% up to 7%

   6. The value of unreported assets is determined based on:
      • Nominal value, for cash or cash equivalents;
      • Acquisition cost, for assets other than cash or cash equivalents;
      • In the case that the abovementioned value is unknown, the value of assets shall be determined at the fair value of similar or equivalent assets based on the Taxpayer’s own valuation.
   7. If the Director General of Taxes finds data and/or other information regarding other undeclared/underdeclared assets, such assets are treated as income of the 2022 Fiscal year and subject to final income tax of 30% plus administrative sanctions.
2. Policy II: Individual Taxpayers – Disclosure of Net Assets Not Declared in the Individual Income Tax Return for FY 2020
   1. An Individual Taxpayer can disclose the following Net Assets:
      • Acquired from 1 January 2016 to 31 December 2020;
      • Still in possession as of 31 December 2020;
      • Not reported in the Individual Income Tax Return for Fiscal Year 2020.
   2. The criteria of Individual Taxpayer who are eligible to enjoy the Voluntary Disclosure Program are as follow:
      • Not under a tax audit and/or preliminary investigation for 2016 up to 2020 fiscal year;
      • Not under a tax crime investigation, court process on tax crimes, or serving sentences for tax crimes.
      • Has a Tax ID Number (NPWP) and pays the Final Income Tax for the disclosure of assets in the VDP;
      • Has submitted the Individual Income Tax Return for Fiscal Year 2020; and
      • Revokes the application of tax overpayment refund; reduction or abolishment of administrative sanctions; reduction or cancellation of incorrect tax assessment notice (SKP); Reduction or cancellation of incorrect tax collection notice (STP); Objection; Correction; Appeal; Lawsuit; and/or Judicial Review related to 2016 up to 2020 Fiscal Years.
   3. The undeclared/underdeclared Net Assets are considered as additional income acquired in the 2020 Fiscal Year and subject to Final Income Tax with certain rates depending on the conditions of the Net Assets as follows :
      

      	Rate	Conditions
      Assets situated in Indonesia	12%	Invested in: -Renewable Natural Resources or Energy business sector within Indonesia, and/or Government securities
      	14%	Not invested in: -Renewable Natural Resources or Energy business sector within Indonesia, and/or Government securities
      Assets situated overseas	12%	-Repatriated to of Indonesia, and -Invested in the Renewable Natural Resources or Energy business sector within Indonesia, and/or Government securities
      	14%	Net assets overseas, with the conditions: -Repatriated to Indonesia, and -Not invested in the Renewable Natural Resources or Energy business sector within Indonesia, and/or Government securities
      	18%	Not repatriated to Indonesia.

      Failure to meet the conditions within the specified time will incur additional Income Tax ranging   from 3% up to 7%

   4. The value of unreported assets is determined based on:
      • Nominal value, for cash or cash equivalents;
      • Acquisition cost, for assets other than cash or cash equivalents;
      • In the case that the abovementioned value is unknown, the value of assets shall be determined at the fair value of similar or equivalent assets based on the Taxpayer’s own valuation.
   5. If the Director General of Taxes finds data and/or other information regarding other undeclared/underdeclared assets, such assets are treated as income of the 2022 Fiscal year and subject to final income tax of 30% plus administrative sanctions.