Taxonomy of Economic Groups: A Proposal for Tax Supervision on High-Net-Worth Individuals (HNWI) in Indonesia
Abstract
High Net Worth Individual (HNWI) is defined as an individual who has wealth or income on the highest scale. The role of HNWIs in a country's economy is very significant. However, in 2022 the contribution of tax revenues from all individuals (Income Tax Article 25/29 Individuals) in Indonesia will only reach 0.68% of the total national net tax revenues. In this writing, the authors aim to evaluate the effectiveness of the tax supervision policy performance of the Individual Taxpayer in Indonesia. The method used is using a descriptive qualitative approach through case studies using primary data in the form of interview results. Based on this writing, supervision of HNWIs in Indonesia is known to be not optimal. Where the supervision carried out has not been able to mitigate the risk of using Aggressive Tax Planning which, among other things, can be carried out by HNWIs using names other than the name concerned in disguising ownership of assets or income. This writing finds the most significant enabler in optimizing HNWI tax supervision is through the identification of HNWI income streams which in this writing are grouped into 8 (eight) nodes depicted in a diagram which the authors call "Taxonomy of Economic Groups". This writing finds that the risk treatment for this risk event is by changing the provisions of Article 18 paragraph (4) of the Income Tax Law.
References
Alstadsæter, A., Johannesen, N., & Zucman, G. (2018). Who owns the wealth in tax havens? Macro evidence and implications for global inequality. Journal of Public Economics, 162, 89-100.
ATO. (2005a). Introduction to Concepts and Risk Assessment. Canberra: Australian Tax Office
ATO. (2005b). A Simplified Approach to Documentation and Risk Assessment for Small to Medium Businesses. Canberra: Australian Tax Office.
Boadway, R., Chamberlain, E., & Emmerson, C. (2010). Taxation of wealth and wealth transfers. Dimensions of tax design: The Mirrlees review, 758(8).
Buchanan, J., & McLaughlin, L. (2017). Revenue Administration: Implementing a High-Wealth Individual Compliance Program. International Monetary Fund.
Capgemini. (2018). World Wealth Report 2018. Amerika Serikat: Capgemini
Chan, H. F., Gangl, K., Supriyadi, M. W., & Torgler, B. (2023). The effects of increased monitoring on high wealth individuals: Evidence from a quasi-natural experiment in Indonesia. Journal of Economic Behavior & Organization, 215, 244-267.
Chen, K. S., & Tsai, H. (2018). Taxing the rich policy, evasion behavior, and portfolio choice: A sustainability perspective. Cogent Business & Management, 5(1), 1526362.
Chooi, A. (2020). Improving Tax Compliance Establishing Risk Management Framework. ADB: The Governance Brief.
Clarke, B., Swinburn, B., & Sacks, G. (2016). The application of theories of the policy process to obesity prevention: a systematic review and meta-synthesis. BMC public health, 16, 1-19.
Degl’Innocenti, D. G., & Rablen, M. D. (2018). Tax Evasion on a Social Net-work. Cesifo Working Papers.
Diamendia, T., & Setyowati, M. S. (2021). Analisis kebijakan compliance risk management berbasis machine learning pada Direktorat Jenderal Pajak. Indonesian Treasury Review: Jurnal Perbendaharaan, Keuangan Negara dan Kebijakan Publik, 6(3), 289-298.
Direktorat Data dan Informasi Perpajakan. (2021). Menuju Data Driven Organization: Jejak Langkah Direktorat Data dan Informasi Perpajakan. Jakarta: Direktorat Jenderal Pajak.
DJP. (2024). Laporan Tahunan 2022 Direktorat Jenderal Pajak. Jakarta: Direktorat Jenderal Pajak.
Dunn, W. N. (2015). Public Policy Analysis: An Integrated Approach. Routledge.
Esoimeme, E. (2016). Wealth management, tax evasion and money laundering: the Panama papers case study. Law Digest, (11).
European Commision. (2006). Risk Management Guide for Tax Administrations. European Commision’s Taxation and Customes Union Directorate General.
FATF. (2013). Anti-Money Laundering and Terrorist Financing Measures and Financial Inclusion. FATF Guidance.
Frank, K. (2021). The Wealth Report. United States: Optichrome
ISO. (2009). Risk Management Risk Assessment Techniques ISO 31000. International Standard Organization
Komite Nasional Kebijakan Governance. (2011). Draft Pedoman Penerapan Manajemen Risiko Berbasis Governance. KNKG.
Mahmood, M. (2012). Compliance risk management strategies for tax administrations in developing countries: A case study of the Malaysian revenue authority (Doctoral dissertation, University of Warwick).
Miles, M. B., & Huberman, M. A., & Saldana, J. (2014). Qualitative Data Analysis. Los Angeles: SAGE.
Mulligan, E., & Oats, L. (2013). Tax risk management: evidence from the US. British Tax Review.
Narender, V., & Sarma, I. R. S. (2018). Factors Influencing Investments of HNWIs: A Study of Select Investors. NMIMS Journal of Economics and Public Policy, 10-17.
OECD. (2009). Engaging with High-Net-Worth Individuals on Tax Compliance. Paris: OECD publishing
OECD. (2009). Managing and Improving Compliance: Recent Developments in Compliance Risk Treatments. Paris: OECD
Rausser, G. C., & Freebairn, J. W. (1974). Estimation of policy preference functions: An application to US beef import quotas. The Review of Economics and Statistics, 437-449.
Saad, N., Mas’ud, A., Aziz, S. A., Manaf, N. A. A., & Mashadi, M. A. (2021). Tax Noncompliance of High Net-Worth Individuals (HNWIS) in Malaysia: Perspectives of Tax Professionals. Jurnal Pengurusan, 63, 85-98.
Sekaran, U. (2003) Research Methods for Business: A Skill-Building Approach. New York: John Wiley & Sons.
South Centre. (2020). Taxing The Hard to Tax, High Networth Individuals & The Informal Sector. Wataf Training.
Sugiyono. (2012). Metode Penelitian Pendidikan Pendekatan Kuantitatif, Kualitatif, dan R&D. Bandung: Alfabeta.
Tanzi, V. (2012). Equity, transparency, cooperation and the taxation of high net worth individuals. Asia-Pacific Tax Bulletin, 18(4), 299-307.
Treasury Inspector General for Tax Administration. (2021). The IRS Continued Compliance Efforts for High-Income. Taxpayers After Disbanding the High-Income High Wealth Strategy, but With Less Effective Outcomes.
Wei, C. C. (2013). From bureaupreneur to HNWI changes and emergence of high net worth individuals (HNWIs) in China. (Doctoral Dissertasion of The University of Edinburgh).
Copyright (c) 2024 International Journal of Science and Society
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
.png)
.jpg)
.png)
.png)
.png)
.png)
1.png)
.jpg)
-modified.png)
-modified.png)
-modified.png)
