Illustration Bali Property Direct About Tax Amnesty II Indonesia

Tax Amnesty II: What Property Owners Need to Know!

January 25, 2022 | General Tips

If you own property in Indonesia and haven’t reported it in your past tax declarations, then you must read this and find out whether you can benefit from the Voluntary Tax Disclosure Program, which is also called “Tax Amnesty II”.

Here we go: The second Indonesian Tax Amnesty is official since 22 December 2021 with the publication of the implementing regulation for the “Voluntary Disclosure Program” (Program Pengungkapan Sukarela).

Participation is open from the 1^st January 2022 and ends on 30 June 2022.

There are basically two schemes available depending on the type of taxpayer:

Program I: is for individuals and corporations that participated in the previous Tax Amnesty but have not fully disclosed their assets acquired between 1 January 1985 and 31 December 2015.

The applicable tax rates are:

6% for assets in Indonesia or outside Indonesia but to be repatriated and invested in certain investment instruments
8% for assets located in Indonesia or located outside Indonesia but to be repatriated to Indonesia that will not be invested in certain investment instruments
11% for assets located outside Indonesia that will not be repatriated to Indonesia.

The asset and liability values used for calculating the final tax depend on their values and conditions at the end of the fiscal year 2015. The maximum liability is capped at 50% for individuals and 75% for corporate.

Program II: is for individual taxpayers with net assets acquired between the beginning of 2016 and the end of 2020 which were not reported in the annual tax filings.

The applicable tax rates are:

12% for assets in Indonesia or outside Indonesia but to be repatriated and invested in certain investment instruments
14% for assets located in Indonesia or located outside Indonesia but to be repatriated to Indonesia that will not be invested in certain investment instruments
18% for assets located outside Indonesia that will not be repatriated to Indonesia.

The asset and liability values used for assessing the final tax are based on the nominal value (cash and cash equivalent) or acquisition cost of the assets. In case the acquisition cost of the assets is unknown, the taxpayer uses the market value of the asset as of 31 December 2020.

Participation is done via the submission of a Declaration Letter of Asset Disclosure (Surat Pemberitahuan Pengungkapan Harta) and can be done online on the website of the Tax Authority’s website.

Assets are to be repatriated until 30 September 2022 through bank transfer. Permissible investment projects are natural resources processing and renewable energies as determined by the government and state securities. Such investments need to be held for at least five years.

The motivation for participating in this new tax amnesty is that tax sanctions are waived that would have otherwise been imposed on not fully disclosed assets under Program I and that under Program II there will be no tax assessment for financial years 2016 through 2020.

What does all that mean for you, the owner of a property in Bali, or anywhere in Indonesia? Well, it is simple: if you have declared the property in one of your tax filings, there is nothing to worry and you don’t need to participate in the program. Nevertheless, you may participate to declare other assets than property to benefit from the tax amnesty.

However, if your property was acquired between 1985 and 2020 and hasn’t been declared you better take this opportunity and participate (if you qualify).

If you are in doubt about what to do after reading this, you should contact a tax lawyer or a tax consultant. We can point you in the right direction.

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