Tax Brackets

SECTION 18 SENTENCE ( 2) INCOME TAX [CODE/LAW] AND ITS(THE COMPARISON WITH SOME STATES)

Common

Rule as arranged in Section 18 sentence ( 2) Income tax [Code/Law] in inveterate international taxation literature is called " controlled foreign corporation rule" or shortened [by] CFC rule. Order concerning CFC basically to prevent taxpayer in a state does tax deferral to its(the production, by the way of doing transaction or investment in nations recognized with the title " tax havens", because tax rate in the very low nations or even there is no tax at all. In general, intention of order CFC is that taxpayer doesn't remove its(the production country exit by found company in certain nations because its(the taxation rule is very clearance.

Rule arranging CFC to contain three principal element that is definition from CFC, production type bowing to order CFC, and treatment of tax to the production.

Conditions applied to specify is a company considered as company entering category CFC, as arranged in Section 18 sentence ( 2) be:

a) level of investment of taxpayer in country in company is intended [by] [at] least 50% from legal capital remited; or

b) together equal compulsorily other tax has investment of lowest legal capital of 50% from stock amounts remited.

If the covenant is fulfilled [by] hence dividend from its(the investment will be hit PPh in Indonesia, although company place of the investment doesn't allot dividend.

This rule arranged in Decree of The Minister for Finance No. 650/KMK04/1994, that is that dividend paid by company build in nations sebagaiaman mentioned in catalog, assumed divided. So the standard ministrial decree contains two the fundamental, that is treatment of tax to dividend from investment by taxpayer in country as arranged in Section 18 sentence ( 2), and nations catalog place of doing of investment.

Ketetentuan arranging about CFC to include;cover two main problems that is, cognition from " tax haven country" and determination of production type which to the applicable production of rule rule of CFC.

definition of State tax haven

Determination bottom of nations place of doing the investment not based on criterion that is clear, besides that nations is state tax haven. State tax haven has konotasi that its(the low tax rate. The concerned low tax rate is lower tax rate from tax rate applied in domicile state. So from Indonesia eyeglasses, the nations has lower tax rate from rate PPh. Comparison of the tax rate only considers his(its nominal rate is only.

In other nations of measuring rod used not only his(its nominal rate, but also comparison between rates effektif applied in nations CFC with rate effektif inside the country. In practice of this thing very difficult because having to monitors rate effektif every year his(its. Which is easier its(the applying is by doing approach by considering level of tax that is actually is paid in the nations. As comparison, what embraced by Argentina, Australia and Selandia Baru looks like Indonesia because in the law and regulation of its(the tax doesn't give definition is so-called with " state with low tax rate". While some states, for example Denmark, Perancis, Norwegian and English applies comparison between level of taxes paid by CFC with level of tax inside the country.

Approach through " tax that is actually is paid" in state where CFC stays, to determine does the state admission in categorizing low tax gone through by Japan by applying plafond 25% as directive.