Tax Implications on Financial Instruments Resulting From IFRS 9 Adoption in Indonesia (original) (raw)
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Tax Implications on Financial Instruments Adopted by IFRS 9 in Indonesia
This study aims to analyze the tax implications of financial instruments after International Financial Reporting Standards (IFRS) 9 adoption in Indonesia into Statement of Financial Accounting Standard 71 (PSAK 71). To gain an in-depth understanding regarding the implementation of PSAK 71, we conducted semi-structured in-depth interviews with policymakers, PSAK standard setters, academicians, tax consultants, and taxpayers. We also used case studies related to the convergence of IFRS 9 to identify the tax implications of implementing the new standard. The results show that the entities applying PSAK 71 generally measure and recognize financial assets or financial liabilities at fair value. Besides, they use amortized costs in specific conditions. However, current tax regulations relevant to financial instruments still refer to the acquisition cost following Article 10 of the Income Tax Law. Accordingly, the gains or losses in respect of financial instruments are not recognizable for tax purposes. Although fiscal correction has proven to be a panacea for bridging the gap between taxation and accounting standards, policymakers urgently need to revise the outdated regulations to provide taxpayers with legal certainty and ease of administration. The significant contribution of this study is the attempt to link the accounting and taxation aspect of financial instruments with the setting of Indonesia.
The Recent Development of Tax Accounting in Indonesia
International Journal of Scientific and Research Publications (IJSRP), 2020
This study has two objectives. The first aim is to reveal the development of tax accounting thoughts in Indonesia before and after the 2012 convergence of International Financial Reporting Standards (IFRS). The other objective is to provide options to tax policymakers to solve the book-tax difference because of IFRS convergence. This study is qualitative research adopting Foucauldian archaeology of knowledge, using documentary materials and collections of statements, and using in-depth interviews. This research concludes that the development of tax accounting thoughts is not separable from and depends on the development of accounting thoughts before the 2012 IFRS convergence. Before and after the IFRS convergence, the tax accounting thought keeps unchanged and under the industrial accounting paradigm with the following characteristics: rules-based, transaction-focused, historical cost accounting, matching cost against revenue, reliability-based. The shift of financial accounting paradigm from the industrial era to the information one does not bring about the change in the tax accounting thought since the relevant tax laws have not changed yet. Finally, the book-tax difference gets increased. The other conclusion is to decrease the book-tax gap requires two methods. First, conceptually tax policymakers and their stakeholders should perform joint discussions so that tax reconciliation will be insignificant automatically. Besides, the tax imposition must consider legal certainty and ability-to-pay tenet so that taxpayers' compliance can increase and compliance costs can decrease.
The Influence of IFRS on the Sukuk Accounting Standard in Indonesia
Singapore Middle East Insight Islamic Finance Special, 2016
This paper analyzes the influence of International Financial Reporting Standard (IFRS) 9 on Indonesia's sukuk accounting standard. The latter was revised to be more in harmony with the dominant global standard. The writer interviewed senior accountants of Islamic banks who were aware of the issue, as well as reviewing and comparing the sukuk accounting of Islamic banks after the revised standards were applied. IFRS adds market valuation and any changes recognized in other comprehensive income (OCI). Therefore, Indonesia's Statement of Financial Accounting Standard (SFAS) 110 was revised to accommodate IFRS, but a more complete adoption of IFRS 9 requires further review from Islamic scholars, especially in regard to the use of discount and interest rates for valuation. Islamic scholars in Indonesia prohibit this method for valuation.
Procedia - Social and Behavioral Sciences, 2014
The article aim is to analyze the impacts of International Financial Reporting Standard adapting to performance of finance banking go public in Indonesia. The benefits of this research are usefulness for banking academic scientific people, management of banks, and public according to their interests. Population as an object in this research is all of commercial banks listed in Bank Indonesia website. The representative samples are 11 banks have been going public. Used data got from the statements of financial position from 2010 periods by used purposive sampling. The research methods first used classical assumption, and then the data from the 11 banks are compared. From the research it's showed that there are correlation from the implementation of PSAK 50 and 55 2006 revision that adapted from the IFRS for the financial instrument that there are showed at the allowance for the impairment losses. Selection and peer review under responsibility of Prof Dr Gülsün A Başkan
Tax Administration Issues on Revenue Recognition after IFRS 15 Adoption in Indonesia
Jurnal Borneo Administrator, 2021
This study aims to provide a brief and analytical reporting on IFRS 15 adoption in Indonesia into PSAK 72 related to Income Tax and Value Added Tax issues that may arise. We use literature studies to collect data and strengthen it with in-depth interviews of taxpayers, PSAK standard setter, tax consulting practicioner, and Directorate General of Taxes official. Our findings demonstrate the need for entities to consider taxation issues that may arise due to revenue recognition developments. Unconformity that may arise between accounting and tax requires the entity to explain these differences by documenting them early. Taxpayers need to underline the burden of compliance arising from the IFRS 15 adoption, which is the compliance costs in the form of mark-to-market and realization taxation. In implementing PSAK 72 to align with the realization principle in the Income Tax Law, the taxpayer compliance cost will increase by making detailed fiscal reconciliations. From the VAT perspective...
Other Comprehensive Income and Its Tax Implications in Indonesia
International Journal of Scientific and Research Publications (IJSRP), 2020
The purpose of this study is to analyze the ability to pay principles related to the components of other comprehensive income (OCI). As the Income Tax Law adopts the ability to pay principles in fulfilling equality principles, we elaborate the data on hand to understand the suitable tax imposition on OCI for the Indonesian context. Hence, this study's other output is to serve recommendations to tax authorities in Indonesia regarding tax options finding. We applied qualitative methods, using documentary materials, collection of statements, and in-depth interviews. The primary interviewees were policymakers, constituents of financial accounting standards (Standar Akuntansi Keuangan; SAK), academic scholars, tax consultants, and taxpayers. Our findings are that the different nature of the components of OCI requires different treatment to ensure the principle of equality performs properly. This study concludes that the income tax imposition on the components of OCI in Indonesia needs to be distinctly regulated based on markto-market, realization, or hybrid taxation. The tax policy option for the gains and losses of financial statements for overseas business activities is realization taxation. It is better to choose hybrid taxation for unrealized gains and losses of the changes in revaluation surplus of fixed assets and intangible assets. A mark-to-market taxation approach prevails only if the tax authority issued approval for the revaluation. It remains for realization taxation if there is no approval. We should also impose realization taxation for the remaining components. These are our recommendations.
Research Development Related to Implementation of Financial Accounting Standards in Indonesia
2019
This study tries to investigate the development of accounting standard research from 7 accredited journal in Indonesia. We conduct a sample of 35 articles for the period 2003-2017. Each article will be classified based on research topics, research methods, and kinds of standards that was observed by the researchers. The most widely researched topics related to the Financial Accounting Standards are topics related to the IFRS-based Financial Accounting Standards. The most commonly used research method is analytical method as much as 21 articles (60%). Standards that was observed by 26 articles (74,3%) is the implementation of Indonesian IFRS-based Financial Accounting Standards (SAK-IFRS). The other observed Indonesian Governmental Accounting Standards (SAP), Indonesian sharia accounting standard (SAK Syariah) and Indonesian Accounting Standard Non Publicly Accountable Entities (SAK-ETAP) where each of them are 3 articles, 5 articles and 1 article. Keywords: Analisis, financial accou...
International journal of scientific and research publications, 2019
The purpose of this study is to describe whether International Financial Reporting Standards (IFRS) convergence in Indonesia implies the behavior of tax management or earnings management of publicly-listed companies whose corporate income tax is not subject to final tax. This study uses a mixed approach, collecting textual data using document analysis techniques and participant observant, and collecting numerical data from public companies' audited financial statements available on the official website of the Indonesian Stock Exchange. This study uses the Book-Tax Difference (BTD) approach to identify the behavior of tax management or earnings management. Based on 288 sample data (1,152 firm-year observations) for the 2010-2013 period, this study revealed that corporate behavior in the form of tax management or earnings management continues to occur before and after public companies adopt IFRS in their financial statement.
Proceedings of the Asia Pacific Business and Economics Conference (APBEC 2018), 2019
This study analyzes the impact of changes in Indonesian Accounting Standard 46 (PSAK 46): Income Tax (revised in 2013) on final tax presentations in financial statements. This study used construction and real estate companies listed on the Indonesian Stock Exchange for the book period 2014-2016. The result shows six classifications of final tax presentation among companies. Also, the result of average tests of financial ratios comprising effective tax rates (ETRs), cash ETR, and operating profit margins indicates that the variety of final tax presentations have a significant impact on these three ratios. The result of such diversity in final tax presentations creates a lack of ability to compare financial statements.
An Accounting Perspective of Tax Amnesty in Indonesia
Journal of Accounting Auditing and Business
In 2016, the Indonesian government has issued a new tax program, which is tax amnesty. The application of tax amnesty was driven by of the global economic downturn, due to the decreasing trading activity, followed by the increasing prices of the export-import activity. In addition, the tax ratio in Indonesia is considered to be too low compared to other neighboring countries. However, as anticipated, the implementation of tax amnesty requires global information disclosures, particularly repatriation fund from overseas investments. For example, in addition to banks in Indonesia, Singapore is one of a place to invest. According to The Jakarta Post (2016), more than a half of Singapore’s economy is supported by Indonesian business people with an estimation of US$200 billion in private banking assets and 40 percent of the island’s total private banking assets. Such investments are to be disclosed in tax amnesty program. This particular disclosure as in Automatic Exchange of Information ...