Minister of Finance Regulation (PMK) No. 81/2024 marks a significant milestone in the reform of Indonesia’s tax system. This regulation not only addresses technical changes in tax administration but also introduces the Coretax system. As a result, it will alter the way taxpayers and tax authorities interact.
For law firms, which often act as tax advisors or are involved in tax dispute resolution, these changes bring both challenges and significant opportunities. Additionally, this article will discuss the impact of PMK 81/2024 and the implementation of Coretax on law firms in detail.
What is PMK 81/2024?
PMK 81/2024 is a regulation that governs improvements in Indonesia’s tax administration system. Specifically, it relates to the implementation of Coretax, a system designed to integrate all aspects of tax administration, from reporting and payment to compliance monitoring. As a result, this system aims to enhance transparency, efficiency, and accountability in tax management in Indonesia.
PMK 81/2024 includes over one hundred revisions to various existing tax regulations. Some of the major changes covered in PMK 81/2024 include:
- Simplifying tax procedures: Information technology enables taxpayers to report and pay taxes more efficiently through electronic systems. This includes streamlining regulations for VAT, income tax (PPh), land and building tax (PBB), and luxury goods tax (PPnBM).
- Implementation of Coretax: The Coretax system integrates various previously separate tax applications, enabling integrated and digital tax reporting and monitoring.
- Updates to VAT and PPh regulations: Changes in VAT for digital transactions and adjustments to tax rates and income tax (PPh) regulations affect businesses and individuals, including sectors previously not fully covered by the tax system.
The Impact of PMK 81/2024 and Coretax on Law Firms
For law firms with practices in tax law, PMK 81/2024 and the Coretax system bring several impacts, both in terms of challenges and opportunities. Below are some aspects that legal practitioners should understand in order to navigate these changes:
Increased Role of Law Firms in Tax Dispute Resolution
With the implementation of Coretax, tax monitoring and compliance will be more transparent. However, this also increases the likelihood of tax disputes, especially related to discrepancies between taxpayer reports and the data recorded in the electronic tax system. Law firms will play an important role in handling tax disputes that may arise from such discrepancies, including:
- Preparing tax objections that comply with the new provisions.
- Resolving tax disputes through administrative or litigation channels, which may involve testing data recorded in Coretax.
Updates in Tax Report Preparation and Consultation
Law firms that also provide tax consulting services will face growing needs to understand and implement the technical changes introduced by the Coretax system. Consequently, staying updated on these changes will be crucial for providing effective advice to clients. This includes gaining a deeper understanding of:
- Managing digital tax reports is essential, especially for more complex taxpayers such as large companies, business groups, or those involved in cross-border transactions. Moreover, this requires a strong understanding of the new digital tax systems to ensure accuracy and compliance.
- Electronic reporting obligations, requiring closer monitoring of changes in the tax administration system that may affect taxpayer reporting duties.
Stricter Tax Compliance and More Transparent Monitoring
Coretax allows for stricter monitoring of tax obligations, requiring law firms to focus more on ensuring client tax compliance. Law firms specializing in tax law must be able to:
- Develop efficient tax strategies that comply with the latest regulations.
- Handle the potential for more frequent tax audits by tax authorities, given the transparency of the new system.
Increased Digital Tax Services for Clients
Law firms that adopt technology will have the opportunity to offer digital tax services to their clients. This includes managing tax reports and payments automatically using the Coretax system. Consequently, this will be highly beneficial for clients, especially those with numerous tax transactions or international transactions. In addition, such services will create added value for law firms while improving efficiency in tax administration.
Changes in PPh, VAT, and Other Tax Regulations
Changes in VAT, income tax (PPh), and land and building tax (PBB) will affect how law firms provide advice to clients. Specifically, this is crucial for those in sectors impacted by revisions in tax regulations. Notably, some relevant changes for law firms include:
- New VAT and income tax (PPh) rates and policies affecting corporate tax obligations.
- Provisions for tax on digital transactions, increasingly focused on e-commerce transactions, which may require adjustments to tax strategies for companies operating in the digital sector.
Examples of Tax Calculations Based on PMK 81/2024
Here are some examples of tax calculations based on the latest provisions in PMK 81/2024:
Example of VAT Calculation (Value Added Tax)
The implementation of VAT on digital transactions uses the formula 11/12 x 12%, resulting in an effective rate of 11%. For instance, if a law firm provides legal services worth Rp 10,000,000, the VAT calculation is as follows:
Transaction Value: Rp 10,000,000
VAT Rate: 12% (standard VAT rate)
VAT Formula: 11/12 x Taxable Base = Tax Payable x 12% (rate applied) Taxable Base: 11/12 x Rp 10,000,000 = Rp 9,166,666 VAT Payable: Rp 9,166,666 x 12% = Rp 1,100,000 Total Payment:
Transaction Value: Rp 10,000,000
VAT: Rp 1,100,000
Total: Rp 10,000,000 + Rp 1,100,000 = Rp 11,100,000
Example of Corporate Income Tax (PPh) Calculation
PMK 81/2024 also sets the corporate income tax rate at 22% for taxable income. For instance, a company with a taxable income of Rp 5,000,000,000 in one year would face the following calculation:
Taxable Income: Rp 5,000,000,000
Corporate Income Tax Rate: 22%
Corporate Income Tax Payable: Rp 5,000,000,000 x 22% = Rp 1,100,000,000
Example of Property Tax (PBB) Calculation
For PBB calculations, for example, if a company owns a property with a NJOP (Taxable Sale Value) of Rp 2,000,000,000 and a PBB rate of 0.5%, the calculation is as follows:
NJOP: Rp 2,000,000,000
PBB Rate: 0.5%
PBB Payable: Rp 2,000,000,000 x 0.5% = Rp 10,000,000
Example of Luxury Goods Tax (PPnBM) Calculation
Finally, PMK 81/2024 updates the PPnBM rate for several categories of luxury goods. For example, if a luxury car is sold for Rp 1,000,000,000 and the PPnBM rate is 30%, the calculation is as follows:
Car Price: Rp 1,000,000,000
PPnBM Rate: 30%
PPnBM Payable: Rp 1,000,000,000 x 30% = Rp 300,000,000
Opportunities for Law Firms
PMK 81/2024 and Coretax present significant opportunities for law firms to offer more advanced and efficient services to their clients. These opportunities include:
- Providing more adaptive tax consulting services, focusing on the tax provisions resulting from Coretax changes.
- Offering integrated tax audit and compliance services based on digital technology, allowing law firms to provide faster and more accurate data-driven tax solutions.
- Developing tech-based legal practices can improve internal efficiency. Moreover, it enables law firms to reach more clients seeking modern tax solutions.
Conclusion
PMK 81/2024 and the implementation of Coretax usher in a new era for Indonesia’s tax system, making it more efficient and integrated. For law firms, these changes present challenges in adjusting tax strategies. However, they also open significant opportunities to offer innovative, technology-driven services. In addition, law firms that master these changes and adopt digital tax systems will be better prepared to face competition in an increasingly complex and digital tax landscape. By gaining a deep understanding of these changes, law firms can become invaluable strategic partners for clients navigating a more intricate and digital tax system.