BERITA TERKINI
Ilustration.
JAKARTA, DDTCNews – The Director General of Taxes may re-assess the amount of tax that should be payable by referring to the substance over form principle.
The provisions under Article 32 paragraph (4) of Gov. Reg. 55/2022 apply if there are tax avoidance practices that cannot be prevented using the mechanisms regulated under Article 32 paragraph (2) of the regulation. This is also outlined in the elucidation of Article 18 of the Income Tax Law as amended by the Harmonisation of Tax Regulations Law.
“If specific prevention instruments cannot be used, the director general of taxes may apply the substance over form principle,” explained the Directorate General of Taxes (DGT) in its official statement, quoted on Monday (26/12/2022).
Pursuant to Article 44, the prevention of tax avoidance practices referred to in Article 32 paragraph (4) of Gov. Reg. 55/2022 is carried out by re-assessing the amount of tax that should be payable.
The assessment is carried out by taking into account the limitations of authority and implementation procedures; activities carried out by taxpayers that fall within the scope of tax avoidance; stages of formal and material assessments; quality assurance mechanisms; and/or protection of taxpayers’ rights.
“Tax avoidance practices … are prevented with good governance and the Taxpayers may continue to make dispute resolution efforts,” reads a fragment of Article 44 paragraph (2) of Gov. Reg. 55/2022.
The provisions on the limitation of authority and implementation procedures, taxpayers’ activities that fall within the scope of tax avoidance, stages of formal and material assessments, quality assurance mechanisms and protection of taxpayers’ rights are stipulated in a minister of finance regulation.(kaw)
