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Panama Papers Part 2_1

29 Apr 2016

Panama Papers Part 2

                The first round of leaked documents brought the murky financial practices of globe’s elite to the light. This leaked document is suspected from the other Big Law Firm (Portcullis) that working together with Mossack Fonseca.

                In the second round, The International Consortium of Investigative Journalist (ICIJ) will release on May 9, 2016 the additional database with information on more than 200.000 offshore entities.  This data comes from the Panamian Law Firm Mossack Fonseca about companies, trusts, foundations and funds incorporated in 21 tax havens. It links to peoples in more than 200 countries.

                I believe that they will announce more Indonesian peoples and companies in this list of Panama Papers part 2 than part 1. Government can take action to review and check/ audit with or without tax amnesty policy.

                Based on our tax reporting system, the said persons / companies should have reported their assets in the tax haven countries.  But I believe this reporting way will not be sufficient in fulfilling the obligation as a good tax payer, since the amount of shares mostly only US$ 1. While the aim of the structure containing more significant values with significant potential tax liabilities.

                The fact behind this structure will become crucial issues. In this case, the tax authority will follow ‘substance over the form’ principle. The real transactions should be disclosed properly regarding hidden assets, unreported income from Indonesia, unreported sources of fund, etc.

                Tax amnesty, if it happens, will become a way to report it only but how to calculate tax exposures on real transactions is the most crucial part to be done.

                Government has already anticipated if tax amnesty is not approved by parliament soon.  They will issue government Regulation (PP or Perpu) regarding The Offshore Voluntary Disclosure Program (OVDP) / Deklarasi Pajak, if tax amnesty failed. Government is confidence to collect significant tax from the above sources.  Normal tax rate will be applied on OVDP.

Now it is a good time to clean up the murky financial practice and pay tax properly!!!

Best,

Agung Tjahjady SH, CPA, MM, BKP

Registered Tax Consultant, Advocate

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https://tax-legal.id/

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