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The Sun Also Sets, Just Later

Indonesian Tax Officials Extend Deadline for Tax Registration Until February 2009.

Bali News:
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The Indonesian government has extended the deadline on its "sunset policy" from December 31, 2008 until February 2009. The policy, which waives tax sanctions for companies and individuals who register and acquire official tax numbers (NPWP) before the deadline date, is being extended by the government in response to numerous requests from the public.

The "sunset policy" has been labeled by the government as a genuine success, increasing the number of registered tax payers by more 3 million to more than 10.2 million.

Indonesia's Minister of Finance, Sri Mulyani, remains committed to increasing Indonesia's tax base and resulting revenues. To this end, she is forging new relationships between the tax office, immigration and the Department of Justice. Reflecting this new cooperation, the immigration department now requires applicants for Indonesian passports to have an NPWP. Meanwhile, Bank Indonesia is assisting the Department of Taxation by requiring that NPWP be noted on every foreign exchanged transaction exceeding US$10,000.

Clearly, Indonesia is heading toward a more pervasive and encompassing tax regime. Much of this new regime will center around the NPWP, a number that may soon be required on a whole range of legal documents and financial transactions.

Possible changes of particular concern in Bali include:

• Indications that Notaries are now requiring the inclusion of an NPWP numbers for all parties to property transactions. This will place nominees in a potentially precarious position with tax officials who may question the source of funds used for leases and purchase agreements.

• Concerns that immigration officials will begin counting the number of days "in country" during the past 12 months and require payment of the Rp. 2.5 million fiscal tax for anyone having spent more than 183 days in Indonesia in the past year.

• Banks requesting NPWP numbers for any transfer in or out of the country exceeding US$10,000.

One local observer, referring to the tidal changes now underway with the Indonesian tax system commented, "hang on, this could get interesting."

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