ASSESSMENT REPORT ON TAX

Number: 007 / LP / BFSC / I / 2020 / MDN

Date: January 14, 2020

A. Background

In accordance with the taxation system in Indonesia, where Tax Assessment were originally Conducted
by Officials becomes Self Conduct Assessment , which is to give the taxpayer confidence to self-calculate
the tax owed on him, both individuals and business entities. Therefore, based on this system, there are
still many business practitioner and workers who does not understand the regulations regarding tax
administration and the calculation of the tax payable on the taxable income.

Thus upon this matter, taxpayer cannot be blamed for not having a standard taxation knowledge, it is
known that the officials has not provided socialization and education on tax calculation and reporting for
business practitioner. In addition, since the completion of the government tax amnesty program in 2016
it continues to strive in monitoring taxpayers of their tax reports and payments, this shows on the
number of appeals made by Tax Account Representatives and the number of invitation made for review
purpose.

This certainly creates a polemic against business practitioners for the examination and correction made
by the tax authorities. Sometimes there are differences in the results of reviews by the tax authorities,
not to mention administrative sanctions and tax penalties.

Given this, we have collaborated with ROOT CAPITAL, in providing previews and education in the field of
taxation by way of conducting a tax review on reports made by taxpayers, so that they are in accordance
with applicable laws and regulations, and we shall provide insight in making improvements to the
revised taxes and administrative for the current year.

B. ASSIGNMENT

1. MOU between : PT. BFSC with Ketiara Coffee Traders Cooperative

2. MOU Number : 006 / PJ / BFSC / XI / 2020 / MDN

3. Tax period and year :

- 2 0 1 9

4. Type of Business Entity : CO-OPERATIVES

5. Start date : 8 January 2021

C. OBJECTIVES OF THE WORK

a. Provide views to taxpayers about the system tax administration in accordance with the law and
regulation applied.
b. Provides insights for improvements for tax reporting that has been made.
c. Minimizing the risk of getting sanctions and penalties when a tax review is carried out by DJP

D. TAXPAYER IDENTITY

a. Taxpayer Name : KOPERASI COFFEE TRADERS (KOPEPI) KETIARA

b. TIN : 03.074.074.0-104.000
c. Address : JL. Raya Umang No.76 Umang. Free. Aceh Tenga
d. Bookkeeping Method : Cash Method
e. Bookkeeping system : Using a computer system
f. Book Year : 01-12-2019
g. Person in Charge : Juandhika
h. Business Activities : Coffee Collecting Traders

E. REVIEW IMPLEMENTATION

1. Based on Clients Documents

a. Financial Statements and Balance Sheet
b. PEB data
c. General Ladger
d. Premium Bank Current Account
e. Bank Rupiah Current Account
f. Sales Recap
g. List of Assets
h. Deed of Incorporation
i. Payrol 2019
j. Accounts Receivable Recap
k. Accounts Payable
l. 2019 VAT report
m. PPh 21 2019 report
n. PPh 23 2019 report
o. Proof of Payment of Annual SPT 2019 and Proof of SPT Report
2. Material reviewed
ALL Tax
3. General Description of Taxpayer's Business Activities
Export activities of coffee generated from farmers.
G. DETAILED OF REVIEW RESULTS

1. Corporate Income Tax

Whereas based on the results of the data we received, we did not find the 2019 Annual Tax Return,
therefore we cannot make a comparison between the tax payable for the cooperative income in 2019
and the year before that. However, based on the financial reports we have received, a review were
made, based on the data and calculations, the payable tax on income in 2019 is at Rp. 144,280,212, -

2. Income Tax Article 21

According to the taxpayer

Based on PPh Article 21 reports from January to December 2019 that has been carried out by the
taxpayer, stated that DPP (Dasar Pengenaan Pajak (Tax Base)) for PPh Article 21 is at Rp. 980,281,200,
with income tax payable based on SSP (Surat Setoran Pajak (Tax Payment Slip)) data that we received
amounting to Rp. 13,907,714, -

According to the Consultant

We made a data comparison between the PPh Article 21 report and the Cooperative Financial
Statement, we discovered a difference in both data where the numbers in Income Statement were
greater than the numbers found in SPT PPh Article 21 reportss. There is a difference of Rp. 293,413,491,
between PPh Article 21 reports with Cooperative Financial Statement.

Due to the unavailability of data on income receipt, we then calculate the Payable Tax based on the
difference in the DPP (Tax Based Income). As for the Payable Tax, which then be be calculated at a
progressive rate of Rp. 49,497,772, - plus penalties as stated in Sanctions Article 8, were amounting to
Rp. 5,937,573, -

1. Income Tax Article 22

Based on the Purchasing data from the Cooperative, there are objects of Income Tax Article 22 that have
never been reported and deposited, as much as Rp. 41,322,573,000, - There is a risk of underpayment of
Income Tax Article 22 amounting to Rp. 206,612,865, - and when added with Penalties stated in
Sanctions Article 7, amounting to Rp. 1,200,000, - and Penalties stated in Sanctions Articles 8 and 9
would be Rp. 24,793,544, -

2. Income Tax PPH Article 23

Whereas for the Income Tax PPH Article 23, there was an error in determining the imposition object of
Income Tax. We’ve made a correction on this because within the SPT report, stated a payment for
outsourcing services and packaging services paid by individuals with a DPP correction value of Rp.
959,424,760, - where the object should not be reported in the SPT PPh Article 23 report, but the value is
an Object of Income Tax Article 21.
3. Income Tax Article 26

Based on the results of our findings, there are 2 objects of Income Tax Article 26 reported by
taxpayers. However, in the report we found that there was an error in determining the rate for the
Income Tax. Based on the SPT report, the taxpayer used 15% rate with the amount of Article 26
Income Tax Base (DPP) of Rp. 284,828,920, - and the paid Rp. 37,219,971, - of the tax value. There is
a risk of underpayment of taxes due to an error in determining the tax rate, where the tax rate on
foreign services should be 20%, furthermore there is still a risk that the Tax Payable based on the
DPP calculation would be Rp. 19,745,687.-

4. Value Added Tax (VAT)

Based on the results of our findings, there is a difference in sales objects which has been equalized
between the Income Statement and the Periodic VAT SPT report. We assume that the difference is
at the object of Domestic VAT by calculating the DPP VAT increment of Rp. 2,414,384,548, - there is
a risk of underpayment of VAT of Rp. 241,438,454, - which still has to be paid to the state treasury.

H. CONCLUSION AND RECOMMENDATION

1. Conclusion
a. Whereas the PPh 21 which still has to be paid for the principal of taxes plus the penalty
sanctions which is Rp. 55,417,344.
b. Whereas for Income Tax Article 22, the tax that still has to be paid with the total
principal of taxes plus the penalty is Rp. 232,606,409, -
c. Whereas for Income Tax Article 26, the principal amount of tax to be paid is Rp.
60,169,229, -
d. Whereas the tax that still has to be paid on the VAT Object is Rp. 241,438,454, -
e. Whereas on the results of this study, to our opinion that there are still many mistakes in
tax administration. This happens due to the taxpayer's lack of understanding in carrying
out tax administration. This situation are quite common, regarding to the numerous
regulations and frequent changes of the regulations and the lack of socialization by the
officials.

2. Consultant's Recommendation
a. After the research has been carried out, there was a high risk of underpayment of taxes
in 2019. We suggest that improvements should be made for the reporting to avoid
further administrative sanctions and to avoid any review actions carried out by Fiskus.
b. It became necessary for a broader and deeper knowledge of taxation, and supervision
provided by Directorate General of Taxation in order to get a better information on tax
revision and tax filing carried out by experts in their fields.
c. Business transactions carried out by taxpayers such as foreign transactions, in which
taxpayer must deduct Income Tax Article 26. However based on our research there are
still transactions that have not been reported and wrong tax rates are still being used.
Based on the results of interviews with taxpayers, the large amount of tax rates and tax
 burdens borne by the taxpayers makes the business practitioner continue to spend
more cash for payment. Therefore, we recommend that for taxpayer conducting
transactions against foreign tax objects should make an agreement in how to manage
DGT 1 documents so that they can take advantage of the tax treaty rates where rates
applied would be lower than the previous rates.

We submit this report to be used as materials of improvement for taxpayers and practitioners based on
the completion of this assessment.

We thank you for your attention and cooperation.

Medan, 14 January 2021

PT. BFSC

Ivan Jovi Hutauruk, S.H., MH

President Director