Introduction to Tax Management

Unavoidable Control
Necessity

Tax Management
 TAX Buy TAX

Control toward taxable

Cash Process
activities

TAX Sell TAX

EFFICIENCY
 TAX AVOIDANCE
• Legal
• Lawful
√
Control toward taxable • Ethical
activities • Legal manipulation

TAX EVASION
• Ilegal
• Unlawful
X
• Unethical
• Opportunistic manipulation
EFFICIENCY
 Tax Evasion Scope
• Ignorance / kealpaan
• Error / kesalahan
• Missunderstanding / kesalahpahaman
 If not
Tax is an obligation fulfilled Sanctions

• Taxpayer tend to pay as low as possible

Definition of Tax Management
Efforts to ascertain that any matters related to the
organization’s taxation can be managed properly,
efficiently and economically, so as to provide
maximum contribution to the organization.
Characteristics of Tax Management
• LEGAL. Comply with any tax law.
• INTEGRAL. Tax management should become an
integral part of whole organization’s
management & planning.
• VALID. Tax management should be proofed by
valid documentation (e.g.: agreement, invoice,
accounting treatment)
• CASH FLOW. Tax management relate with the
cash flow controlling activities.
• NET PRESENT VALUE. Maximize the net present
value.
 Tax Avoidance vs. Tax Evasion
Penghindaran vs. Penggelapan Pajak

Tax Avoidance ≠ Tax Evasion

Same objectives = Minimize the tax payable,

but using difference manner

Lawful Unlawful
 Tax Avoidance vs. Tax Evasion
UU KUP article 38 & 39 :
• Do not file the tax return
• File the untrue/incomplete tax return
• Provide false bookkeeping/documents
• Do not perform the bookkeeping
• Do not pay the withholding tax
• etc
 Tax Avoidance vs. Tax Evasion
What includes in Tax Evasion?
• Falsely minimize the reported income
• Falsely maximize th COGS: fake purchasing, put
the VAT in as expense
• Falsely maximize the operating expense (fake
debt, fake expense)
• Transfer pricing using opportunistic RPT scheme
• Shrouded dividend
Tax Evasion Motives
• complexity of tax rule
• Amount of tax required to pay
• cost of bribe
• detection risk
• size of penalty
• Morality
Objectives of Tax Management
• Fulfill the tax obligations
• Efficiency to increase profit

Achieved Through

Functions of Tax Management

• Tax planning
• Tax implementation
• Tax control
Tax Planning
• Plan about what, when, how, who
related to tax decision, to achieve the
goals.
• Tax planning goals are to legally
manipulate the business aspects so as
to result low tax burden, employing
rule loopholes
Tax Planning

3 considerations in tax planning:

1. Comply with the tax rules
2. Reasonable practice from business point of view
3. Adequacy of proof/documentation
 Tax Implementation
• Tax planning is implemented, in consideration
with the tax law compliance
• The tax obligation can be fulfilled if:
– Understanding the tax rule
– Performing proper bookkeeping
• Doing things right, doing right things
 Tax Control
• Tax control is performed to ascertain whether
all of the tax obligations have been done along
with the tax planning implementation.
– Administrative control: consist of efforts to fulfill
the administrative obligation (hitung, setor, lapor)
which are comply to any rules
– Cash management