Navigating a Complex WebDecember 9, 2016
“Oh, what a tangled web we weave, when first we practice to deceive”.
Dealing with issues arising from the Indonesian tax amnesty has led to some questions on the veracity of the concept underlying this quote: dishonesty leads to more and more complexity as one covers tracks and actions and eventually the ‘perpetrator’ is caught in some way – either by enforcement of some form of justice, or by getting so entangled in the whole deception that normal life is impossible.
It seems to some that this can be turned on its head when we look at the impact of the tax amnesty. Those who have deceived or evaded in the past can now rest relatively easy, whereas those who felt they had been compliant and had no intention to deceive or evade, but were simply not fully aware of obligations, are being caught in a complex web.
These musings are not intended to venture too far into the moral issues surrounding the tax amnesty, but it does highlight in quite stark terms the impact that knowledge has. Those in the know have been able to navigate (or steer?) the system to their benefit, whilst those less aware are facing punitive situations, each different to the other, which no regulation covers and for which there is no definitive solution.
Lessons to be learned, in harsh terms, may be “Ignorance of the law is no excuse”, or possibly “knowledge is power”. Either way, and at whatever stage you are in terms of dealing with the Indonesian tax system, knowledge of obligations, rights and implications is critical in ensuring that you are best placed to avoid being caught in a complex and often costly web.
At the corporate level, whether your entity has taken advantage of the terms of the tax amnesty or not, or even if you have not yet entered the Indonesian market, such knowledge can assist greatly in making the correct decisions to minimize leakage, managing the effective tax rate of operations and optimizing exit strategies.
Many taxpayers will be all too aware of the potential costs arising from any scrutiny from the Indonesian Tax Office but as they step up the gears into enforcement mode, these issues will become even more important.
We can help……
We have extensive experience across the full gamut of Indonesian tax issues affecting taxpayers in a wide range of industries. We offer:
- Consideration of issues from the commercial standpoint – rather than quote legislation, we provide clients with solutions to the key problems faced in each situation. Whether this is in terms of initial investment structuring, understanding obligations or the impact of a new transaction, or assisting with audit defense or dispute resolution, we provide clear guidance throughout
- Early identification of potential areas of exposure or opportunities for savings which allows for planning and handling of issues in the most effective and efficient manner
- Knowledge of transfer pricing, customs and investment issues which allows for seamless and consistent service
- Communication in a clear, concise yet comprehensive manner which eliminates areas of misunderstanding and allows clients to make informed decisions
Market entry/corporate tax structuring
We provide expert assistance to new entrants and to established businesses, ensuring that business models are aligned with tax strategies and that inefficiencies and surprises are minimized. Clients choose us because of our partner engagement, the wide scope of our service and the practical, common sense approach which results in clear, effective solutions.
Comprehensive fiscal reviews
Our unique approach, based on the vast experience and expertise honed by former ITO officials, helps in identifying both potential exposures and areas where tax savings can be made. As the techniques and methodologies used are those of the ITO, the resulting reports leave taxpayers ideally prepared to defend positions in the event of a tax audit and ensures that tax-saving strategies are robust and compliant
Transfer pricing solutions
Our people have been involved in well over 100 transfer pricing engagements and have assisted taxpayers withstand challenges to arrangements on purchases, sales, intra-group services provision and royalties. We have also assisted in the preparation of documentation defending financing arrangements. We can advise on strategy, documentation requirements and provide audit defense solutions. By combining our specific transfer pricing knowledge and experience with our general tax, customs and regulatory expertise, we ensure a holistic solution, avoiding conflicts and inefficiencies
Audit defense and dispute resolution
Audits and verifications are frequent occurrences and invariably result in significant adjustments and disputes. Our practice includes personnel with all the necessary qualifications to represent taxpayers in dealings with the Tax Office and in any necessary appeals to Tax Court. We have a wealth of experience in defining and executing strategy in all aspects of tax controversy. Our transfer pricing expertise is an invaluable complement to this.
M & A/Due Diligence
We guide clients through the options available, taking account of tax and investment regulations, including foreign investment restrictions, in formulating optimal strategies, modeling, identifying efficiencies or exposures, reporting and at contract drafting stage.