TAX MANAGEMENT

PLANNING OF TAXES: HOW TO EQUALIZE ITEMS IN INCOME TAXES, VAT

AND LAND & BUILDING TAX

By:

Fahmi Reza Gilang Perkasa

14312015

UNIVERSITAS ISLAM INDONESIA

FACULTY OF ECONOMY

ACCOUNTING

Taxes for the government are a source of revenue used to finance state expenditure,
both for routine and development expenses. But for companies, taxes are costs or costs that
will reduce net income. If it is obtained from large companies, then the income tax that can be
obtained also from large countries. Based on this phenomenon the company in this case its
financial manager, trying to be able to make savings or tax savings (still within the framework
of tax provisions). Companies can do a variety of ways to minimize the tax burden which
remains in the transition approved tax provisions by tax planning. Tax Planning is the initial
stage for a systematic analysis of various taxation arrangements with the aim of achieving
minimum payments. In the stream of globalization and the level of intense competition, causing
a company manager or business entity in carrying out its corporate tax planning is demanded
to truly master the further challenges. Both in terms of internal and external, so that tax planning
can be carried out appropriately and thoroughly on transactions that have an impact on taxation.

Tax planning must be carried out by every level of management. For top management,
they must implement strategic planning. The more down the management level, the more
effective the operational tax planning. For middle management, they help their superiors in
making strategic planning and guiding their subordinates in making operational planning. Tax
planning cannot be released from corporate business planning. For this reason, tax planning
must be an integral part of corporate business planning. One of integrating tax planning with
corporate business planning is by applying the Kaplan and Norton Balance Scorecard model.
(Budi, 2013)

INCOME TAX

Tax planning is the first step in a tax management. At this stage, it starts with a review
of the tax regulations to take tax saving measures to be taken. Then, what is the purpose of tax
planning? The main goal is to engineer the tax burden as low as possible while still referring
to the law but is different. Economically trying to maximize after-tax income (after tax return).
Tax is an element of profit reduction that is available and distributed to shareholders or to be
reinvested. (Klikpajak, 2019)

(Aviantara, 2015) Tax planning stages:

a. Analysing the existing data base

b. Designing one or more possible tax plans
c. Evaluating a tax plan
d. Debugging the tax plans
e. Updating the tax plan
 (Budi, 2013) The company's strategic plan as a taxpayer is the effective and efficient
implementation of tax obligations. This strategic plan cannot be separated from the company's
overall strategic plan. In this case, effective means that the objectives can be achieved
according to plan, while efficient means that the task is carried out correctly, organized, and on
schedule. In general, there are five taxation strategies, namely:
 Tax Saving
Tax saving is an effort to streamline the tax burden through alternative tax impositions with
lower rates. For example, companies can choose employee benefits in cash when the Article
21 income tax is lower than the corporate income tax rate.
 Tax Avoidance
Tax avoidance is an effort to streamline the tax burden by avoiding taxation through
transactions that are not taxable. For example, companies that are still experiencing losses,
need to change employee benefits in the form of money to in-kind grants so that these
benefits are not subject to income tax article 21.
 Taxation Sanctions Avoidance
By mastering the applicable tax regulations, companies can avoid the emergence of tax
penalties namely; administrative sanctions in the form of interest, penalties or increases;
and criminal sanctions in the form of criminal or confinement.
 Delaying Tax Payments
Delaying payment of tax obligations without violating applicable regulations can be done
through delaying payment of VAT. This delay is carried out by delaying the issuance of an
output tax invoice up to the time limit allowed, especially for credit sales. In this case the
seller can issue a tax invoice at the end of the following month after the month of delivery
of the goods.
 Tax Credit Optimization
Taxpayers often lack information about creditable payments. Actually the payment is
prepaid tax. For example, the tax credit for corporate income tax consists of income tax
article 22 for purchases of diesel and / or imports and foreign fiscal for official travel.

The advantage for taxpayers to do tax planning is to reduce the tax burden that must be
paid. When preparing tax planning, the thing to consider is to look for loopholes in the Tax Act
(Tax Avoidance). However, this does not mean you may violate the tax rules. Therefore,
knowledge of tax planning is needed by companies so that the tax burden borne becomes
lighter. The following efforts you can make to prepare tax plans to minimize the amount of
income tax payable. (Klikpajak, 2019)

1. Pay Attention to Company Costs

In taxation, fees are divided into two categories namely, deductible fees and non-deductible
fees. Deductible costs are costs that do not need to be revised fiscal corrections because
these costs are recognized by taxation regulations. That is, these costs can be deducted from
the company's gross income statement.
Meanwhile, non-deductible costs are costs that are not recognized by taxation. This means
that these costs must not reduce the company's gross profit and must be made positive fiscal
correction. Based on the grouping of these two costs, the company must manage
transactions whose costs may not be reduced in fiscal terms.
2. Withholding
Withholding is associated with deductions and tax collection. Companies must be able to
optimize tax credit by always asking for proof of cut for each transaction made. Why is
that? The proof of deduction at the end of the year can be used as a tax credit that will
reduce the outstanding Corporate Income Tax.
3. Gross Up Income Tax 21 Allowance
The company certainly provides tax benefits to employees. Allowances are allowed to be
used as expenses. The provision of tax benefits can provide benefits for both employees
and companies. Employees benefit from additional input and the company benefits because
it can reduce its taxes.
4. Merger with Companies that Have Huge Losses
A merger with a company that has a large loss can reduce the tax that must be paid.
According to the Director General of Tax Circular No. SE-21 / PJ.42 / 1999 On May 26,
1999, when the two companies were combined, the accounting for the losses of the
company which had suffered losses could be transferred to the combined company as long
as the revaluation of fixed assets had previously been carried out.
5. Revaluate The Company
Revaluation is the revaluation of assets and aims to bring back assets that have used up the
benefits. Revaluation of fixed assets is intended so that the cost of depreciation of these
assets still exists and can reduce the company's gross profit.
 VALUE ADDED TAX

The purpose of understanding the characteristics of VAT is that taxpayers can

distinguish characteristics from income tax. Besides, mandatory taxation is better able to apply
it in practice. This is because VAT regulation is different from income tax.

VAT was first introduced by Carl Friedrich Von Siemens, an industrial and German
government consultant in 1919. The Indonesian government began to adopt the value added
tax system on April 1, 1985 to replace the sales tax that had been in force in Indonesia since
1951. The value added tax replaced the role of sales tax in Indonesia because VAT has some
positive characteristics that sales tax does not have, namely:

1. Objective Tax
What is meant by objective tax is a type of tax where the tax obligation arises when it
is determined by the objective condition factor, that is the condition, event or legal action
which is subject to tax is also called the name of the tax object. As an objective tax, the
obligation to pay VAT is determined by the existence of a tax object. Tax subject conditions
do not determine.
2. VAT is an Indirect Tax
This character provides a juridical consequence that the bearer of the tax burden (tax
desinataris) and those responsible for paying taxes to the state treasury are different parties.
These tax-bearers are obviously domiciled as buyers of taxable goods or recipients of
taxable services. Meanwhile, the person in charge as the seller of the taxable goods knows
the taxable entrepreneur.
Therefore, if there is a deviation in the collection of VAT, the tax office will hold the
taxable goods seller or the taxable service entrepreneur responsible, not to the buyer, even
though the buyer might also be a taxable entrepreneur. As an indirect tax, VAT has the
following characteristics:
 Economically, the tax burden is transferred to other parties, those who will consume
goods or services that are subject to tax.
 Legally, the responsibility for paying taxes to the state treasury is not in the hands of
those who bear the tax burden.
3. Multi Stage Tax
Multi stage tax is a characteristic of VAT that is imposed on each chain of the
production line and the distribution line. Every delivery of goods becomes the object of
 VAT tax starting from the level of the manufacturer then at the level of the wholesaler in
various forms or names (wholesaler) up to the level of the retailer's merchant subject to
VAT.
4. The Mechanism for Collecting VAT Using a Tax Invoice
As a consequence of using the credit method to calculate the VAT owed, at each
submission of the BKP or JKP, the relevant taxable entrepreneur is required to make a tax
invoice as proof of tax collection. On the other hand, for the buyer, service recipient or
importer is proof of tax payment. Based on this tax invoice the amount owed in a tax period
will be calculated, which must be paid to the state treasury.
5. VAT is General Domestic Consumption
As a tax on domestic general consumption, VAT is only imposed on the consumption
of taxable goods and / or taxable services performed in the country. Therefore, imported
commodities are subject to VAT in the same percentage as domestic products. As a tax on
consumption, the ultimate goal of VAT is to impose a tax on expenditure for consumption,
whether carried out by individuals or by bodies both private and governmental bodies in
the expenditure of goods or services charged to the state budget. Consumers do not merely
consume goods, but also consume services. For that, so that the tax burden borne by
consumers can be calculated properly, besides being imposed on consumption of goods,
VAT is also imposed on consumption of services.

Value added tax planning can be done as follows:

1. Maximizing input VAT that can be credited; companies should obtain taxable
goods/taxable services from taxable entrepreneurs, so that the input tax can be credited.
Companies need to observe closely not to have input taxes that have not been credited yet.
2. In the case of sales of taxable goods/taxable services for which payment has not been
received, the making of a tax invoice can be delayed until the end of the following month
after the delivery of taxable goods/taxable services. VAT is imposed on the surrender of
taxable goods/taxable services performed by taxable entrepreneurs and import of taxable
goods.
3. Utilization of intangible taxable goods/taxable services outside customs blood within the
customs area.
4. Export of taxable goods by taxable entrepreneurs. Input taxes that can be credited are input
taxes directly related to production, distribution, marketing, and management of taxable
 goods/taxable services and their tax invoices are standard tax invoices or documents that
are equated with standard tax invoices. input tax that cannot be credited if:
 Company before it was confirmed to be a taxable entrepreneur
 Simple tax invoice
 Invoice tax invalid
 Not filled completely and there are streaks or deletes
 Input tax on purchases of sedans, jeeps, station wagons, vans and combi
 Input tax relating to the production of taxable goods/taxable services
 Input tax that is not directly related to business activities on taxable goods
 Input tax reported on the VAT period SPT, which is found during the examination
period/which is shared through SKP.

Input tax that has not been credited with the output tax in the same tax period, can be
credited in the next tax period, no later than the third month after the end of the financial
year, as long as it has not been charged as a fee and has not been inspected.

LAND AND BUILDING TAX

(Permana, 2016) Based on the law of the Republic of Indonesia No. 12 of 1994
concerning land and building taxes explained that basically every person or entity in the
territory of the Republic of Indonesia and residing in a place has an obligation to pay the United
Nations. This is because the earth and buildings can provide benefits and or better socio-
economic status for people or entities that have a right to benefit from the land and buildings.

(Permana, 2016) Land and building tax is a tax that is material in the sense of the
amount of tax payable is determined by the state of the object, namely land and / or buildings.
The state of the subject does not determine the amount of tax.

(Alfayed, 2009) Tax planning on land and building taxes can be from:

1. The Sale Value of The Tax is Not Taxable

If the taxpayer has more than one land and building tax object, the sale value of the taxable
object is not taxable, but only one (KMK No. 201/KMK.04/2000) is used.
2. Tax Object Sale Value
If you own land and/or buildings, do not exceed more than 1 billion and not plantations,
forestry or mining, because if the value is less than 1 billion, the taxable sale price is only
 20% otherwise (if including plantations, forestry, or mining) 40 %) according to PP No. 25
of 2002.
3. Reduction
(Azkia, 2017) For submission of relief can be done through the following procedures:
 The request for reduction is submitted in writing in the Indonesian language to the head
of the tax service office issuing the tax return letter/tax assessment letter.
 The contents of the request letter state the percentage of reduction requested.
 Attach a statement from the Taxpayer; photocopy of family card; photocopy of
electricity, water and/or telephone bill; photocopy of proof of payment of land tax and
building of the previous Fiscal Year; and/or other supporting documents.
 Petition is submitted no later than 3 months from the tax return / tax assessment letter
received by the taxpayer or since the occurrence of natural disasters or other
extraordinary causes.
 Collective deductions are submitted before the tax return is issued no later than January
10 for the tax year concerned.

While the amount of reduction can reach 75% of the land and building tax owed under
certain conditions. Whereas in the case of a taxpayer, a person with a low income, the relief
provided can reach 100% of the land and building tax owed. (Azkia, 2017)

4. Comply with regulations so as not to be fined 2% per month.

5. Change the allotment of land and / or building so that it is not an object of land and building
tax, for example a grave or place of worship.
 References

Alfayed, A. (2009, January 28). Ortax. Retrieved from Ortax:

https://ortax.org/ortax/?mod=forum&page=show&idtopik=2824
Aviantara, A. (2015, June 16). Aris Aviantara & Associates Tax & Accounting Advisory.
Retrieved from Aris Aviantara & Associates Tax & Accounting Advisory:
http://www.konsultanpajak-aaa.com/aris/
Azkia, F. (2017, August 30). Rumah.com. Retrieved from Rumah.com:
https://www.rumah.com/berita-properti/2017/8/159501/tagihan-pbb-bisakah-
dikurangi
Budi, P. (2013). Manajemen Pajak. Jakarta: PT Pratama Indomitra Konsultan.
Klikpajak. (2019, November 20). Retrieved from Klikpajak Web site:
https://klikpajak.id/blog/berita-pajak/tips-mempersiapkan-perencanaan-pajak-untuk-
perusahaan-anda/
Permana, R. (2016). PENERAPAN PERENCANAAN PAJAK PADA PBB DAN BPHTB
DALAM RANGKA PENCAPAIAN EFISIENSI BEBAN PAJAK TERHUTANG.
Surabaya : yusuf Jailani.