English for Tax

History of Taxation

History of Taxation O During the reign of Egyptian Pharaohs

O Scribes as tax collectors O In Greece

O A tax referred to as Eisphora was imposed only in times of war

O In AthensO A monthly tax called Metoikon was collected to foreigners

O Ancient Greek TaxationO Taxation was used as an emergency power. Additional

resources gained from war were used to refund tax previously collected from the people

OEarliest taxes in RomeO Taxes known as Portoria were customs duties on

imports and exportsO Augustus Caesar introduced the inheritance tax to

provide retirement funds for the military. The tax was five percent on all inheritances except gifts to children and spouses

O In EnglandO Taxes were first used as an emergency measureO Taxes on income or capital were a recent

development as a result of increasing government intervention in the economy

OIn Modern Industrial NationsOThe government designates a tax base (such as income, property holdings, or a given commodity)

OA Tax Law is a body of rules passed by the legislature by which the government acquires a claim on tax payers to convey, transfer and pay to the public authority

TaxationOThe system of compulsory

contributions levied by a government or other qualified body on people, corporations and property in order to fund public expenditures.

OAn inherent power of the state to raise income and to demand enforced contributions for public purposes.

The Purposes of Taxation

The Purposes of TaxationO To raise revenues for public needs so that

persons can live in a civilized societyO The government increase taxes in order to

stabilize prices and stimulate greater production.

O An instrument of fiscal policy influences the direction and structure of money supply, investments, credits, production, interest rate, inflation, prices and in general, of the national economy

Characteristics of a sound Tax system

OFairnessOClarity and CertaintyOConvenienceOEfficiency

Effects of Taxation

O Personal Income Tax which is presumed to fall entirely on the legal taxpayers influences decisions to work, save, and invest. These decisions affect other people.

O Corporate Income Tax may simply result to lower corporate profits and dividends. It may reduce their income of all owners of property and businesses. The company may move toward raising the prices of their products

Taxation in Indonesia

Taxation in IndonesiaO Indonesian taxation is based on Article 23A

of UUD 1945 (1945 Indonesian Constitution), where tax is an enforceable contribution exposed on all Indonesian citizens, foreign nationals and residents who have resided for 120 cumulative days within a twelve-month period.

O Indonesia has a stratification of taxation including Income Tax, Local Tax (Pajak Daerah) and Central Government Tax.

Indonesia Taxation LawO The relevant eight fundamental taxation laws of Indonesia

include:O General Provisions and Taxation Procedures Law "Undang-

undang Ketentuan Umum dan Tatacara Perpajakan/UUKUTp" Law No. 6/1983, amended by Law no.16/2000;

O Income Tax Law ("Undang-undang Pajak Penghasilan/UU PPh": Law No.7/1983, amended by Law No. 17/2000;ameded by law No 36/2008

O Value Added Tax VAT termed 'Goods and Services and Sales Tax on Luxury Goods' ("Undang-undang Pajak Pertambahan Nilai atas Barang dan Jasa dan Pajak Penjualan atas Barang Mewah"/UU PPN/PPn BM ): Law No. 8/1983, amended by Law No. 18/2000;

Indonesia Taxation LawO Land Tax and Building Tax ("Undang-undang Pajak Bumi

dan Bangunan - UU PBB"): Law No. 12/1985 amended by Law No. 12/1994;

O Warrant for Tax Collection ("Undang-undang Penagihan Pajak dengan Surat Paksa/UU PPSP") Law No. 19/1997, amended by Law No. 19/2000;

O Fees for Acquisition of Rights to Lands and Buildings ("Undang-undang Bea Perolehan Hak atas Tanah dan Bangunan/UU BPHTB") Law No. 21/1997 amended by Law No. 20/2000;

O Tax Court Law ("Undang-undang Pengadilan Pajak/UU PP"): Law No. 14/2002;

O Stamp Duty ("Undang-undang Bea Meterai/UU BM") in short, Law Number 13 of 1985.

Taxation RateO Indonesia has a series of progressive sliding rate taxes

for all categories. Furthermore, as a developing nation, much economic activity is done at the 'cottage' level where sales and services taxation are tax exempt.

O Indonesia's taxations system recognises the economic reality of the majority poorer citizens and the poor are exempt from almost any taxation.

O The underlying ethic of "gotong-royong"- "neighbourly [sic moral] help" is applied where the more fortunate wealthier are enforced to meet their moral obligation of a heavier burden of tax- regardless of arbitrary arguments to its fairness.

Kind of TaxesO Income TaxO ncome taxation is subject to Regional (Propinsi) government

regulations defined by the economic realities of that particular area. As mentioned above, the poorer denizens are exempt from almost all taxation.

O Corporation TaxO Companies in Indonesia are taxed at a rate of 25%, for both

domestic and international sourced income. Resident Indonesian companies are required to withhold tax at a rate of 20% from payments to foreign companies.

O Goods and Services TaxationO A Goods and Services Tax (GST) is levied at the rate of approx

10% at point of sale, by major vendors. Sales and services tax are exempt from cottage economies and industries.

Kind of TaxesO Land and Constructions TaxO Land Tax and Tax for the buildings constructed there

upon must paid annually, or may be paid via arrangement in ten-year blocks by Indonesian land title deed-holders, pursuant to relevant criteria for exclusions. In general terms, this tax is applicable mainly to those of the middle classes and upwards. Land holding businesses must also pay this tax.

O Land and Constructions thereupon are calculated at a value calculated by the Regional government- which is less than real market worth

O VehiclesO Passenger Vehicle Tax is required to be paid by all

owners, the rationale being those fortunate enough to afford a motor vehicle can afford to subsidise their poorer brethren who rely on far less luxurious public transportation. Again, Regional Government legislates the specific definitions regarding this tax.

OYear end tax settlement for employeesOApplication forms and english

certificatesOTax guideOTax officialOTax payersOTax payer registered number

O Tax Payment:O A number of money that must be paid

by taxpayersO Tax Law:

O The government’s regulation about taxO Tax Office:

O A place where all the tax can be handledO National Tax Service: ..........O Individual Income Tax Return:............

O Year end tax settlement for employeesO Application forms and english certificatesO Tax guideO Tax officialO Tax payersO Tax payer registered number

ASSIGNMENT

Explain one topic of Indonesia Taxation,then prepare a short presentation of it (in a group)!