An Accounting Perspective of Tax Amnesty in Indonesia

Abstract

In 2016, the Indonesian government has issued a new tax program, which is tax amnesty. The application of tax amnesty was driven by of the global economic downturn, due to the decreasing trading activity, followed by the increasing prices of the export-import activity. In addition, the tax ratio in Indonesia is considered to be too low compared to other neighboring countries. However, as anticipated, the implementation of tax amnesty requires global information disclosures, particularly repatriation fund from overseas investments. For example, in addition to banks in Indonesia, Singapore is one of a place to invest. According to The Jakarta Post (2016), more than a half of Singapore’s economy is supported by Indonesian business people with an estimation of US$200 billion in private banking assets and 40 percent of the island’s total private banking assets. Such investments are to be disclosed in tax amnesty program. This particular disclosure as in Automatic Exchange of Information (AEoI) will start in 2018 and also the revision of banking regulation to disclose data for taxation. AEoI is already agreed in Group of Twenty’s (G-20) meeting last February in China (Merah Putih Bisnis, 2016). After arrived in this situation, taxpayers cannot conceal their asset anymore from the tax authority. The disclosures will include financial proxy war such as assets protection scheme and international planning that will inflict country financial loss (Aliandu, 2016). The Indonesian government also considered tax amnesty as a way out to solve its economic problems. Therefore, the underlying perception for that consideration is that tax amnesty is expected to gain more funds from tax based on disclosing the repatriation fund from overseas investments.

Firm Characteristics, Earnings Management, Tax Amnesty, and Firm Value (study in Indonesia public listed companies)

“…Therefore, the validity and reliability of tax amnesty's assets number in valuing the companies' situation were in a very high doubt. SFAS 70's "relaxing" requirement provides easier accounting procedure, but in the other hand, SFAS 70 might hide the important information about company's tax management, therefore will reduce the positive perception of the investor (Natania and Davianti, 2018).…”

“…al, 2009;Bayer, et.al, 2015). Previous researches have investigated how TA's assets will influence firm value, and what motivates the firm to participate in TA itself (Rinaldi, 2017;Sadaka and Ciptani, 2017;Widodo and Darmanto, 2017;Sari and Nuswantara, 2017;Natania and Davianti, 2018;). The previous research also had a little discussion about the earnings management role in tax amnesty's related decision.…”

Market Reaction to Tax Amnesty Information: Survey on Indonesian Public Listed Companies

“…SFAS 70 required company to disclosed 4 things: (1) Date of certificate of tax amnesty; (2) Serial number of the certificate of tax amnesty; (3) Total value of tax amnesty assets, and; (4) Total value of tax amnesty liabilities. SFAS 70's "relaxing" requirement provides easier accounting procedure, but in the other hand, SFAS 70 might hide the important information about company's tax management, therefore will reduce the positive perception of the investor (Natania and Davianti, 2018). Based on the assessment conducted in the financial statements, most companies disclosed only tax amnesty's assets.…”

“…Higher assets will improve several financial ratios, mostly liquidity, and solvability. However, SFAS 70 were analyzed heavily in the previous research, and the accounting requirements in SFAS 70 were deemed too *Corresponding Author email address: arie.pratama@fe.unpad.ac.id "relaxing", and have a potential to impair the quality of information (Rinaldi, 2017;Natania and Davianti, 2018). SFAS 70 required company to present TA's asset according to the fair value, as described in the Notification Letter of Tax Amnesty.…”

Refining Tax Accounting Education to Improve Accounting Students Skills and Competences

“…The govern-ment will allocate the income tax to finance infrastructure, education, telecommunication, and many other things to develop a country (Asonitou and Hassall 2019). Therefore, the paradigm that paying tax is an obligation should be changed since paying tax is also a right to finance and invest in the country (Nathania and Davianti 2018).…”