CHAPTER II

LITERATURE REVIEW

2.1Tax

The definition or understanding of tax according to Rochmat Soemitro in Mardiasmo (2011:1):Pajak adalah iuran rakyat kepada kas negara berdasarkan undang-undang (yang dapat dipaksakan) dengan tiada mendapat jasa timbal (kontraprestasi) yang langsung dapat ditunjukkan dan yang digunakan untuk membayar pengeluaran umum

Definition or understanding of tax according to Diana, Anastasia and Setiawati, Lilis (2009:1) :Pajak adalah kontribusi wajib kepada negara yang terutang oleh orang pribadi atau badan yang bersifat memaksa berdasarkan Undang-Undang, dengan tidak mendapatkan imbalan secara langsung dan digunakan untuk keperluan negara bagi sebesar-besarnya kemakmuran rakyat

From the definition above, it can be concluded that tax is the contribution from people to the state treasury under the law (which can be enforced) with no fringe benefit, which can be directly demonstrated and used to pay for general expenses.

According to Mardiasmo (2011:2) from the definitions above, it can be concluded that tax has elements such as:

1. Tax collection should be fair (Terms Justice)In accordance with the purposes of the law, to achieve the justice, law, and the implementation of polling should be fair.2. Tax collection should be based on the law (Terms Juridical)In Indonesia, the tax is regulated in UUD 1945, article 23, paragraph 2. This gives a law guarantee to declare of law, neither the state nor its citizens.3. Not disturbing the economy (Economic Terms)Tax collection should not interfere the operation of the production and trade, so that it doesnt cause of the public economic downturn.4. Tax collection should be efficient (Financial Terms)Based on budgetair function, the cost of tax collection must be suppressed much lower than the results that are collected.5. Tax collection system should be simpleA simple collection system will make it easier and support the public to fulfill their tax obligations. This requirement has been fulfilled by the new tax laws.

2.1.1 Functions of Tax

Taxation is a source of state revenue that has two functions (Mardiasmo, 2011:1) as follows:1. Budget function (Budgetair)As a source of funds for the government, to fund expenditures.

2. Set function (Regulerend)As a means of implementing government regulators in the field of social and economy.

2.1.2 Tax Collection SystemThere are 3 (three) tax collection systems according to Mardiasmo (2011:7) that are :

1. Official Assessment SystemOfficial Assessment System is a collection that gives an authority to the government to determine the amount of payable tax:The characteristics are:a) The authority determines the amount of payable tax on the fiskusb) The Tax payers are passivec) The tax debt arising after the tax assessment letter is issued by the fiskus

2. Self Assessment SystemSelf Assessment System is a system that authorizes the taxpayers to determine themselves the amount of payable tax:The characteristics are:a) Authority determines the amount of tax payable on the taxpayers own existingb) Active taxpayers, starting from counting, depositing and reporting tax payablec) Fiskus does not intervence and control

3. Withholding SystemWithholding System is a voting System that gives authority to a third party (not the fiskus and not the taxpayer) to determine the amount of tax payable by the taxpayer.The characteristic is that the authority determines the amount of tax payable that is a fiskus and the taxpayers themselves.

2.2Tax Invoice

The definition of tax invoice Mardiasmo (2009:288) is:Faktur Pajak adalah bukti pungutan pajak yang dibuat oleh Pengusaha Kena Pajak yang melakukan penyerahan Barang Kena Pajak yang digunakan oleh Direktoran Jenderal Bea dan Cukai. Setiap Pengusaha Kena Pajak yang melakukan penyerahan BKP dan atau JKP wajib membuat Faktur Pajak

From the definition above, it can be concluded that Tax invoice is a proof of tax collection made by taxable firm to handover taxable goods used by General Directorate of Customs and Excise. Every taxable firm is conducting to taxable services handover obliged to make a tax invoice.Definition of tax invoice (of Article 1 paragraph 23 of Legislation Number 18 of 2000) :1. Proof of withholding tax (VAT / VAT Luxury Goods) which is made by the taxable firms which are taxable goods handover/ taxable services, or2. Proof of withholding tax (VAT / VAT Luxury Goods) because imports taxable goods which are used by the Directorate of General of Customs and Excise.

2.2.1 Types of Tax Invoice

According to Diana, and Setiawati (2009:288) Tax Invoice can be such as:a) Standard tax invoice In the standard tax invoice it should be included the information about taxable goods handover or taxable services handover:1. Name, address, NPWP that are taxable goods handover or taxable services2. Name, address, NPWP buyer of taxable goods or receiver taxables services;3. Type of goods or services, amount of sales price or excavation and discounts;4. VAT which is levied;5. Luxury VAT which is levied;6. Code, serial number, and the date of manufacture tax invoice; and7. Name, title, and signature who authorize to sign the tax invoice.Tax invoice is a evidence of tax collection and can be used as a means for crediting input tax. Therefore, the tax invoice must be true, both formally and materially.b) Combined tax invoiceTo ease administrative burden, the taxable firm is allowed to make a tax invoice which includes all taxable goods or taxable services handover which happens during one month to the buyer or taxable service receiver which is the same.c) Simple tax invoiceSimple tax invoice is also evidence of tax levies which are made by the taxable to accomodate activities of taxable goods or handover taxable service which is made directly to the final customer.d) Certain documents which are stated as standard tax invoice by the directorate of general of tax.Certain documents which are treated as standard tax invoice must at least include:1. Identity which issues documents;2. Name and address of the document receiver;3. NPWP in terms of the receiver of the document is as a domestic taxpayers4. Amount of units of goods, if any;5. Basis of tax imposition;6. Amount of tax which is payable except in the terms of export.As long as they fulfill the requirements listed above, the documents below can be treated as a standard tax invoice:1. Notification of imported goods (PIB) which is attached the taxpayment and or a proof of collected tax by the general directorate of customs and excise of imports taxable goods;2. Notification of exported goods (PEB) which has been issued by an authorized officer of the general directorate of customs and excise and attached with invoice which is inseparable unity with the PEB;3. Letter of handover goods (SPBB) which is issued by BULOG/DOLOG for distribution of wheat flour4. Invoice of memorandum bon (PNBP) which is issued by Pertamina for handover fuel and not a fuel;5. Sign of payment or receipt for handover telecommunication services6. Tickets, air cargo letter bill (Airway Bill) or handover bill, which is made for handover of domestic air transport services;7. Tax deposit for payment of VAT on the utilization of taxable goods8. Memorandum of sale of services which is issued for the handover of port services;9. Sign of payment or electric bill

2.2.2 Replacement / Correction standard tax invoice

Based on the regulation General Directorate of Taxes in 2013, invoice that is missing can be done following this way :1. Replacement Standard Tax Invoice missinga. Taxable Firm buyers submits a written request to the Taxable Firm seller with a support to the head of tax service office, a place that taxable firm buyers and taxable firm seller gazettes as a taxable firms.b. Based on the written request of the taxable firm buyer, taxable firm seller creates a copy of the tax invoice which is stored for legality by tax service office, a place that taxable firms seller gazettes.c. Legalized provided by tax services office a place that taxable firms seller gazetted after examining SPT Masa PPN from the taxable firms.d. Tax services office a place that taxable firm gazettes, shall conduct research on SPT Masa PPN of PKP buyer, whether the missing reported tax invoice has been credited as input tax or not

2. Standard Tax Invoice Correction is damaged or defective or wrong in filling / writinga. It can be replaced by taxable firms sellers who make standard tax invoice as a replacement.b. It is not allowed by deleting or crossing out or in any other way.c. Issuance of substitute tax invoice which is implemented as an ordinary standard tax invoice.d. Standard tax invoice substitute filled based on the information which should be filled and attached with standard tax invoice which is damaged or defective or wrong in writing / filling.e. Standard tax invoice substitute stamped that includes the serial number, code and date of tax invoice which is replaced.f. Standard tax invoice substitute reported in SPT Masa VAT at the tax period which is the same as the tax period that is reported standard tax invoice which is substituted.g. Issuance of standard tax invoice substitute results in the obligation to correct SPT Masa VAT on the occurrence of manufacturing fault of these standard tax invoice.

2.2.3 Procedure how to report tax invoice

To be able to get a tax invoice number employer should :1. Submit a letter of request activation code and password to the local tax office. If it is approved, the activation code and password will be given to the employer before. The activation code will be sent by post and the password will be sent via email. Therefore, the address of the taxpayer becomes important to be updated so that the activation code letter is not misdirected. Employers are also expected that has had an email and be able to use it, because it will play a role in the delivery of email password by tax authorities.2. Submit a request code and serial number of tax invoice that addressed to the tax office where it is registered. Tax invoice number will be given after the entrepreneurs at the same time enter the activation code and passsword to the tax office computer. After a given the number, then the employer is able to transact freely and collect VAT 10% (ten percent) from the counterparty.2.3Value Added Tax (VAT)

According to Mardiasmo (2008:270) in his taxation book, Value Added Tax (VAT) is:Pajak Pertambahan Nilai adalah pajak yang dikenaka pada setiap kenaikan nilai dari barang atau jasa yang beredar dari produsen ke konsumen. Pajak Pertambahan Nilai (PPN) termasuk pajak tidak langsung, itu berarti pajak yang dibayarkan oleh pihak lain (pedagang) yang bukan penanggung pajak atau dengan kata lain, penanggung pajak (konsumen akhir) tidak menyetorkan langsung kewajiban pajak meraka

From the definition above, it can be concluded that Taxes is imposed on every increase in the value of the goods or services in circulation from producers to consumers. Value Added Tax (VAT) includes indirect taxes, it means the tax paid by other parties (traders) who are not insurer taxes or in other words, the insurer taxes (final consumers) are not directly deposits their tax liability

According to Legislation No. 42 of 2009 of article 4A paragraph (2). The type of goods that are not subject to Value Added Tax are spesific items in the following categories:a. Goods from mining or drilling results are taken directly from sourceb. Basic goods that are needed by many peoplec. Food and drinks which are served in the hotel, restaurant, cafes, includes meals and beverages which are consumed in the place or not, including meals and drinks which are handed over by business services cateringd. Money, gold bullion, and marketable securities

Paragraph (3) that is : types of services which are not subject to Value Added Tax are spesific services in group of services as follows:1) Medical health care services2) Social care services3) Financial services4) Mail services with stamps5) Insurance services6) Religious services7) Education services8) Arts and entertainment services

2.3.1 The Weakness and the Advantages of VAT

According to Mardiasmo (2008:269) the weaknesses of Value Added Tax (VAT) are:a. Double taxation preventationb. Not encourage exports, and have not been able to deal with smugglingThe advantages of Value Added Tax are:a. To prevent double taxationb. Neutral in domestic and foreign tradec. Value Added Tax (VAT) on the acquisition of capital goods which can be obtained back in the month of acquisition, in accordance with the type of consumption and indirect reduction methods. d. Evaluating from incoming state revenue, Value Added Tax received predicate as a money maker because consumer as a tax loadbearing do not feel burdened by the tax making, it is easier for tax authorities to pick it up.

According to Djoko Muljono (2008:6) rate of Value Added Tax (VAT) is currently at 10% (ten percent). Whereas the rates of Value Added Tax (VAT) on export of taxable goods tax was 0% (zero percent) it does not mean exemption from the imposition of Value Added Tax (VAT), but the input tax that has been paid from the exported goods can be credited.Based on consideration of economc development and or improvement funding needs for development, with a tax rate of government regulation, Value Added Tax (VAT) can be changed a minimum of 5% (five percent) and maximum rate of 15% (fifteen percent) with maintaining the principle of a single rate.

2.3.2 Tax Rates

Based on the tax regulations, the rate of tax is divided into 2 parts, that are the rate of Value Added Tax (VAT) and Sales Tax on Luxury Goods. The procedure to calculate the Value Added Tax and Sales Tax on Luxury goods which is payable is calculated by multiplying the tax rate with the tax base (DPP). (www.pajakonline.com/engine/learning/view.php?id=774)

1. Value Added Tax (VAT)a. The rate of VAT is 10% (ten percent)b. The rate of VAT on export of taxable goods is 0% (zero percent)c. Based on governments regulation, tax rate as referred to in subsection 1 (one) can be changed to a minimum of 5% (five percent) and a maximum of 15% (fifteen percent)2. Sales Tax on Luxury Goodsa. The rate of sales tax on luxury goods is the lowest 10% (ten percent) and the highest 75% (seventy five percent)b. The export of taxable goods which is categorized as luxuries are taxed at the rate of 0% (zero percent)

2.3.3 Tax Credit

Based on the tax regulation which is cited in subesction 9 of Legislation no. 143 of 2000 jo Government Regulation No. 25 of 2000 the requirement of credit tax are as follows:1. The main requirement of input tax credit is tax invoice2. Input tax in a tax period is credited with output tax which is levied in the same tax period3. If it can not be credited in the same tax period (for example the tax invoice is received late), input tax still can be credited to the next tax period, not later than three months after the end of the tax period.4. If in the 3 (three) months the tax have elapsed, the input tax still can be credited by doing correction on SPT Masa of VAT.5. In the case at any period which has not been found the output tax, input tax still can be credited.6. If the ouput tax is greater then the input tax, the differerence should be paid into the state treasury and not later than the 15th of the following month7. If the input tax is greater than output tax, the excees can be compensated to the next tax period or requested back (restituted)8. Input tax which can be credited, is the input tax on the acquisition of BKP / JKP which is directly related to business activities from the BKP / JKP.

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