tax assignment adalah

Tax Advisor

Istilah Pajak

Beberapa hari yang lalu saya mendapatkan file pdf dengan nama file 101TaxGlossary. Karena saya tahu penulisnya, saya meminta ijin untuk share ulang. Di sini saya ubah judulnya dengan Istilah Pajak.

101 Tax Glossary ditulis oleh Erikson Wijaya dan Noris Andika Pane.

Tax Accountant Profesi akuntan yang mengkhususkan pada analisis aspek perpajakan di setiap pencatatan akuntansi entitas/unit/individu Wajib Pajak yang ditanganinya. Profesi ini memungkinkan Wajib Pajak dapat memenuhi setiap hak dan kewajiban perpajakannya, antara lain: pelaporan SPT Tahunan/ Masa, pengurusan restitusi pajak, penyelesaian banding dan keberatan, atau pengajuan permohonan administrasi rutin lainnya

Tax Administration Segala sesuatu yang berkaitan dengan pelaksanaan/ operasionalisasi pemenuhan hak dan kewajiban perpajakan Wajib Pajak baik dari sisi Wajib Pajak maupun dari sisi petugas pajak. Rujukan pelaksanaan yang diambil sebagai pedoman dalam pelaksanaan tersebut adalah ketentuan perpajakan (Undang-Undang dan aturan pelaksanaan turunannya) yang disusun dan dilaksanakan oleh otoritas pajak di setiap negara masing-masing (Indonesia: Direktorat Jenderal Pajak- Kementerian Keuangan)

Tax Advantage Nilai ekonomi atau setara nilai uang yang dapat diperoleh atau berpotensi dapat diperoleh ketika Wajib Pajak menerapkan suatu ketentuan perpajakan tertentu secara sah dan tidak menyalahi aturan. Tax Advantage hanya dapat diperoleh jika Wajib Pajak memahami detil di setiap aspek transaksi. Setiap aspek tersebut mengandung ruang yang dapat dimanfaatkan untuk menghemat beban pajak. Ruang tersebut memang secara sah terbentuk akibat ketentuan perpajakan yang berlaku

Tax Advisor Suatu profesi yang memberikan layanan berupa bantuan pemenuhan kewajiban perpajakan sesuai dengan ketentuan yang berlaku dengan mengedepankan upaya penghematan beban pajak tanpa menyalahi aturan perpajakan yang dijalankan. Tax Advisor memiliki batasan dalam menjalankan profesinya yakni hanya terbatas memberikan nasihat profesional dan menjelaskan skema strategis yang dapat dijalankan Wajib Pajak. Tax Advisor tidak diperkenankan menjalankan tugas pemenuhan kewajiban perpajakan sebagai perwakilan Wajib Pajak

Tax Allowance Sejumlah nilai uang yang dapat dikurangkan oleh Wajib Pajak dari penghasilan kotor untuk menghitung jumlah yang dapat dikenai pajak. Bagi pemberi kerja/ pemotong pajak, Tax Allowance berguna untuk menentukan dasar pengenaan pajak yang hendak dipotong/ dipungut. Dengan menerapkan Tax Allowance, Wajib Pajak atau Pemotong Pajak dapat menentukan dasar pengenaan pajak yang tepat.

Tax Amnesty Program pengampunan pajak yang diirilis penguasa/ pemerintah secara resmi dan terbatas waktu tertentu untuk memberikan kesempatan kepada Wajib Pajak agar mengakui ketidakpatuhan pemenuhan kewajiban perpajakan di masa-masa yang telah lewat dengan cara diberikan penghapusan/pengurangan beban pajak yang seharusnya terutang baik pokok dan atau sanksi yang menyertainya dengan maksud untuk memperoleh tambahan penerimaan pajak, meningkatkan kualitas basis pajak, dan sebagai bagian dari agenda reformasi sistem perpajakan

Tax Arbitrage Tax Arbitrage adalah upaya/praktik untuk memaksimalkan laba atau keuntungan dengan cara mengidentifikasi dan mengeksploitasi kompleksitas ketentuan perpajakan. Tax Arbitrage dilakukan dengan cara menata kembali pola atau model transaksi yang dilakukan Wajib Pajak menjadi suatu bentuk yang lebih memberikan penghematan atau penghilangan beban pajak yang dapat dikandung suatu transaksi bisnis. Frase arbitrage dalam konteks Tax Arbitrage dapat diartikan sebagai jalan tengah yang legal untuk menghadapi berbagai ketentuan perpajakan yang dikenakan terhadap Wajib Pajak.

Tax Arrears Tax Arrears adalah jumlah utang pajak yang dimiliki Wajib Pajak yang masih harus dibayar kepada negara/pemerintah namun oleh Wajib Pajak belum dilakukan pembayaran

Tax Aspect Tax Aspect adalah sebuah kondisi transaksi ekonomi/ keuangan yang dapat mengandung kewajiban/ konsekuensi perpajakan sehingga menjadi salah satu pertimbangan bagi pelaku untuk menerapkan pola transaksi tersebut. Semakin besar konsekuensi pajak yang harus ditanggung akibat Tax Aspect memuat kewajiban pajak dengan tarif yang lebih tinggi, maka makin besar kemungkinan transaksi trersebut dihindari.

Tax Assessment Tax Assessment merupakan sebuah praktik untuk menganalisis beragam aspek perpajakan dalam sebuah transaksi ekonomi/ non ekonomi. Tax Assessment biasa dilakukan oleh Wajib Pajak untuk mengukur seberapa besar konsekuensi beban pajak yang berpotensi ditanggung Wajib Pajak dalam melaksanakan sebuah rencana bisnis atau pribadi. Kemampuan mengurai konsekuensi perpajakan merupakan sebuah kemampuan dasar bagi siapapun yang bekerja di dunia Finance, Accountancy, dan Tax (biasa disingkat FAT).

Tax Auditing Tax Auditing merupakan salah satu cabang konsentrasi dalam administrasi atau pelaksanaan pekerjaan berkaitan dengan perpajakan dengan fokus berkaitan dengan pengujian kembali kualitas pemenuhan ketentuan perpajakan di dalam riwayat pelaporan dan pembayaran pajak yang telah dilakukan Wajib Pajak dalam suatu kurun waktu tertentu

Tax Authorities Tax Authorities merujuk pada sebuah entitas (kantor/unit/lembaga/badan) kelengkapan negara yang bekerja berdasarkan ketentuan undang-undang yang sah secara hukum negara tersebut dalam rangka menyelenggarakan operasional dan atau perumusan peratuan di bidang perpajakan.

Tax Autonomy Tax Autonomy adalah sebuah kebijakan administratif suatu negara untuk memberikan kebebasan secara otonom terhadap otoritas perpajakan di dalam aspek tertentu untuk menciptakan pola kerja yang lebih efisien, efektif, dan tepat sasaran. Penerapan Tax Autonomy dapat berupa pemisahan struktural otoritas pajak menjadi tidak lagi di bawah kendali Kementerian Keuangan melainkan langsung di bawah Presiden. Atau di beberapa negara, otoritas pajak tetap berada di bawah Kementerian Keuangan namun kuasa secara otonom diberikan untuk aspek tertentu seperti Sumber Daya Manusia, Keuangan, atau Penegakan Hukum

Tax Avoidance Tax Avoidance adalah istilah umum untuk menggambarkan praktik penghindaran pajak dengan menerapkan teknik-teknik yang legal dan tidak menyalahi ketentuan yang berlaku. Hal ini dimungkinkan bilamana Wajib Pajak memahami seluk beluk aturan perpajakan dan celah-celah yang dapat dimanfaatkan dengan maksud meminimalisir beban pajak yang harus dibayar.

Tax Barriers Tax Barriers adalah pajak yang dibebankan kepada produk-produk tertentu, biasanya produk impor sebelum masuk ke pasar dalam negeri sehingga harga produk tersebut menjadi lebih tinggi dengan maksud untuk melindungi kepentingan dalam negeri seperti produk industri lokal sejenis agar lebih bersaing.

Tax Base Tax Base adalah kumpulan objek pajak baik secara fisik atau melekat bersama subjek pajak dan atau wajib pajak yang memuat potensi pajak yang dapat dikenai pajak sesuai dengan ketentuan yang berlaku. Dapat pula Tax Base didefinisikan sebagai jumlah keseluruhan penghasilan, kekayaan, aset, konsumsi, transaksi, atau aktifitas ekonomi yang dapat dikenai pajak oleh negara.

Tax Benefit Tax Benefit secara umum merujuk pada istilah untuk menjelaskan nilai pajak yang dapat dihemat oleh Wajib Pajak. Adanya Tax Benefit dapat mengurangi beban pajak yang harus dibayar. Hal ini dapat terjadi karena Tax Benefit kerap kali berupa insentif berupa pengurangan atau keringanan yang diberikan kepada Wajib Pajak sebagai bentuk apresiasi untuk telah mematuhi ketentuan perpajakan yang berlaku atau mendorong tumbuhnya perekonomian di sektor tertentu

Tax Bracket Tax Bracket merujuk pada rentang penghasilan yang dikenai pajak dengan besaran tertentu tergantung pada besaran nilai di dalam rentang penghasilan dimaksud. Istilah Tax Bracket biasanya mengaju pada penerapan pajak dengan sifat yang progresif sebab semakin tinggi penghasilan maka semakin besar beban pajak yang dikenakan.

Tax Breaks Tax Break merupakan sebuah kebijakan yang diberikan pemerintah untuk mengurangi beban pajak yang harus dibayar Wajib Pajak dengan cara memberikan fasilitas pembebanan biaya/ perluasan pengurangan penghasilan bruto atau pengecualian pengenaan pajak atas penghasilan yang dilaporkan. Tax Break biasanya berlaku sementara dengan maksud sebagai bagian dari kebijakan pemerintah untuk mendorong iklim usaha di sektor tertentu.

Tax Buoyancy Tax Buoyancy adalah sebuah ukuran untuk menggambar tingkat perubahan atas pertumbuhan penerimaan pajak terhadap perubahan jumlah produk domestik bruto (pertumbuhan ekonomi). Dalam penerapannya, Tax Buoyancy dapat dihitung dengan cara membagi pertumbuhan penerimaan perpajakan (secara riil) dengan pertumbuhan ekonomi

Tax Burden Tax Burden adalah jumlah semua beban pajak atau dampak pajak terhadap total penghasilan yang diperoleh Wajib Pajak. Tax Burden merupakan sebuah konsep umum untuk menggambarkan adanya akumulasi beban akibat pajak yang dianggap dapat mengurangi kuantitas kekayaan Wajib Pajak.

Tax Capacity Tax Capacity adalah kemampuan yang dimiliki pemerintah suatu negara untuk mengumpulkan penerimaan pajak dari total seluruh potensi pajak yang dimiliki/ berhasil diidentifikasi. Ada sejumlah faktor yang mempengaruhi Tax Capacity sebuah negara yaitu: pertumbuhan ekonomi, kualitas infrastruktur, tingkat pendidikan warga negara, atau kondisi sektor penopang perekonomian negara tersebut.

Tax Capitalization Tax Capitalization adalah sebuah metode untuk menambahkan nilai suatu aset (atau penghasilan yang dapat dihasilkan sebuah aset) sejumlah selisih yang muncul akibat penurunan tarif pajak. Hal ini dapat dimungkinkan karena penurunan tarif pajak dapat meningkatkan penghasilan di masa mendatang. Akumulasi kenaikan tersebut dikapitalisasikan (ditambahkan sebagai nilai) ke dalam nilai aset

Tax Characteristics Tax Characteristics adalah sifat dasar pajak yang melekat secara umum. Konsep ini merujuk pada keberadaan aspek perpajakan dalam berbagai sudut pandang, terutama hukum dan bisnis

Tax Clearance Tax Clearance merupakan sebuah status yang menerangkan kualitas pemenuhan kewajiban perpajakan Wajib Pajak. Lazimnya, status tersebut dilegalkan dalam bentuk dokumen sertifikat fisik yang diterbitkan oleh otoritas pajak sebuah negara. Di Indonesia, dokumen tersebut adalah Surat Keterangan Fiskal.

Tax Code Tax Code adalah kumpulan ketentuan hukum perpajakan suatu negara sebagai satu kesatuan yang wajib dipatuhi Wajib Pajak dalam memenuhi hak dan kewajiban perpajakannya. Tax Code disusun menurut topik-topik pembahasan yang dapat diacu Wajib Pajak sebagai dasar legal dalam memahami administrasi dan prosedur perpajakan yang berlaku

Tax Coefficient Tax Coefficient memiliki arti yang tidak berbeda jauh dengan tax rate. Cofficient atau koefisien dalam bahasa indonesia adalah suatu konstanta yang bernilai mutlak dan tetap dapat mempengaruhi nilai suatu variabel dalam menghitung total keseluruhan nilai dalam sebuah persamaan. Berkaitan dengan pajak, maka tax coefficient dapat bermakna konstanta tertentu yang dimasukkan sebagai unsur dalam menghitung besaran suatu variabel untuk menentukan nilai akhir pajak yang terutang, biasanya penggunaan koefisien dalam menghitung pajak terjadi pada pajak daerah.

Tax Collections Tax Collections berkaitan dengan kegiatan pengumpulan pajak melalui mekanisme penagihan utang pajak kepada Wajib Pajak oleh petugas pajak (biasanya memiliki jabatan Jurusita Pajak Negara). Tax collections adalah salah satu unsur penunjang capaian target penerimaan pajak

Tax Competitions Tax Competitions adalah suatu kondisi persaingan antara negara/ yurisdiksi untuk memperebutkan investasi atau perusahaan multinasional dengan menawarkan tarif pajak yang lebih rendah atau administrasi perpajakan yang lebih sederhana dan mudah. Lazimnya, Tax Competitions berkenaan dengan Pajak Penghasilan badan dan Pajak Penghasilan atas karyawan/ tenaga kerja

Tax Compliance Tax Compliance adalah kondisi kualitas kepatuhan Wajib Pajak dalam memenuhi hak dan kewajiban perpajakan sesuai dengan ketentuan perpajakan yang berlaku. Berdasarkan mekanisme pemenuhannya, ada dua jenis kepatuhan pajak atau Tax Compliance, yakni kepatuhan yang dipaksakan (enforced compliance) dan kepatuhan sukarela (volutarily compliance). Sementara, menurut substansinya, ada dua jenis kepatuhan yaitu kepatuhan formal dan kepatuhan material.

Tax Composition Tax Composition berkenaan dengan kontribusi masing-masing jenis pajak dalam menyusun jumlah penerimaan pajak suatu negara/ yurisdiksi dalam rentang waktu tertentu. Konsep Tax Composition bermanfaat untuk mendapatkan gambaran mengenai peran berbagai jenis pajak yang ada dalam menyumbang capaian penerimaan pajak.

Tax Computation Tax Computation adalah suatu mekanisme dalam menyajikan/ menunjukkan proses penyesuaian penghasilan menurut akuntansi untuk kepentingan perpajakan agar dapat memperoleh nilai penghasilan yang dapat dikenai pajak. Penyesuaian untuk kepentingan perpajakan tersebut mencakup penghitungan biaya-biaya yang tidak dapat dikurangkan, penghasilan yang tidak dikenai pajak, pengurangan-pengurangan lainnya, dan tunjangan yang berkaitan dengan modal.

Tax Concesssions Tax Concession berkenaan dengan pengurangan atau pengecualian beban pajak yang harus dibayar sebagai bagian dari kebijakan pemerintah yang diberikan kepada wajib pajak baik badan maupun orang pribadi. Fasilitas pengurangan dalam Tax Concession diberikan pemerintah bagi Wajib Pajak yang memenuhi syarat yang ditetapkan, misalnya batas nilai peredaran usaha/ omset tidak melebihi nilai tertentu atau kelengkapan administrasi pembebanan biaya yang dapat dikurangkan.

Tax Consequences Tax Consequences merupakan sebuah konsep yang menjabarkan bagaimana proses munculnya kewajiban perpajakan yang harus dibayar akibat penerapan suatu mekanisme atau pola transaksi bisnis yang dijalankan Wajib Pajak dalam menjalankan kegiatan bisnisnya atau pribadinya.

Tax Cooperation Tax Cooperation merupakan sebuah praktik untuk menjalin kerjasama antara dua atau lebih otoritas perpajakan antar negara atau yurisdiksi dengan maksud untuk menyediakan kondisi/ iklim perpajakan yang efektif, akuntabel, dan transparan bagi Wajib Pajak suatu negara yang sedang menjalankan atau hendak menjalankan kegiatan bisnis atau investasi di satu atau lebih negara lainnya. Tax Cooperation juga dijalin dengan maksud untuk mengamankan potensi penerimaan pajak oleh negaranegara yang terlibat oleh Wajib Pajak dimaksud.

Tax Costs Tax Costs dapat juga disebut beban pajak. Di dalam laporan keuangan, beban pajak dibebankan sebagai biaya untuk menghitung penghasilan bersih suatu entitas. Beban pajak ini dihitung dengan mengalikan penghasilan bersih yang dikenai pajak dengan tarif pajak yang berlaku atas penghasilan tersebut.

Tax Court Tax Court atau Pengadilan Pajak merupakan suatu lembaga resmi yang dibentuk oleh negara dengan maksud untuk menyelenggarakan forum yudisial dimana Wajib Pajak dapat mengajukan permohonan banding terhadap keputusan utang pajak yang harus dibayar yang telah ditetapkan oleh otoritas perpajakan suatu negara/ yurisdiksi. Di Amerika Serikat, Tax Court dibentuk di setiap jenjang administratif pemerintahan mulai dari tingkat lokal, negara bagian, sampai dengan tingkat supreme (utama).

Tax Crime Tax Crime adalah istilah untuk menyebut suatu tindak pidana di bidang perpajakan yang dilakukan dengan sengaja sehingga menyebabkan kerugian pada pendapatan negara. Ada banyak bentuk tax crime dan setiap negara atau yurisdiksi memiliki definisi yang berbeda-beda. OECD sendiri bahkan memberikan cakupan tax crime juga meliputi tindakan untuk menghindari pajak dengan skema tertentu yang diatur dengan sengaja mencakup penyampaian data dan informasi yang tidak benar.

Tax Culture Tax Culture merupakan sebuah kondisi yang menggambarkan kualitas kesadaran pajak masyarakat dalam skala luas di suatu wilayah negara atau yurisdiksi. Budaya perpajakan, dalam pengertian umumnya, menunjukkan perilaku perpajakan dan norma perpajakan yang berlaku di negara tertentu. Sikap dan perilaku baik wajib pajak maupun pemungut pajak menjadi dasar yang mendasari budaya perpajakan.

Tax Cut Pemotongan pajak atau Tac Cut adalah pengurangan tarif pajak yang diberikan oleh pemerintah. Dampak langsung dari pemotongan pajak adalah penurunan pendapatan riil pemerintah dari penerimaan pajak dan peningkatan pendapatan riil bagi masyarakat atau pelaku bisnis/ usaha yang tarif pajaknya telah diturunkan.

Tax Debt Tax debt atau hutang pajak adalah pajak yang harus dibayar oleh Wajib Pajak kepada otoritas perpajakan negara tempat Wajib Pajak tinggal sebagai warga negara atau berdomisili setelah batas waktu pengajuan. Tidak masalah jika Wajib Pajak mengajukan pengembalian pajak sebelum batas waktu pengajuan dan membayar sebagian tagihan pajak. Sisa saldo masih akan dianggap sebagai hutang pajak.

Tax Declaration Pernyataan pendapatan, penjualan dan rincian lainnya dibuat oleh atau atas nama wajib pajak. Formulir sering kali disediakan oleh otoritas pajak untuk tujuan ini. Tax Declaration biasanya disampaikan dengan bentuk formulir Surat Pemberitahuan atau SPT

Tax Deductible Tax Deductible merupakan salah satu kelompok jenis biaya yang dapat menjadi pengurang penghasilan kotor/ laba kotor/ peredaran usaha dalam menghitung penghasilan bersih yang menjadi dasar pengenaan pajak.

Tax Delinquent Istilah Tax Delinquent digunakan untuk menyebut Penunggak Pajak. Suatu utang pajak menjadi tunggakan jika telah terlampaui batas waktu pelunasan namun oleh Wajib Pajak belum dilakukan pelunasan.

Tax Default Tax Default merupakan istilah untuk menyebut pajak yang gagal dibayar oleh Wajib Pajak baik dalam skema cicilan atau pelunasan. Dengan kata lain, setelah terlampaui batas waktu, tidak ada aktifitas pembayaran yang dilakukan Wajib Pajak atas tunggakan pajak tersebut. Sehingga penggunaan istilah Tax Default tepat digunakan untuk menyebut pajak yang gagal dibayar penunggak pajak.

Tax Discrimination Tax Discrimination mengacu pada praktik penerapan pembedaan pengenaan pajak yang dianggap tidak adil oleh sebagian orang, karena tidak mempengaruhi semua orang secara setara. Ketidakadilan ini dipicu oleh munculnya platform baru dalam bisnis yang tidak mengikuti kebijakan perpajakan pada waktunya.

Tax Disincentives Tax Disincentives adalah pengaruh yang disebabkan oleh pengenaan pajak yang mengakibatkan melemahnya atau berkurangnya kapasitas bisnis, nominal laba bersih, atau skala kegiatan usaha yang dijalankan Wajib Pajak. Tax Disincentives dapat berupa pengenaan pajak dengan tarif yang tinggi, pengenaan pajak berganda, atau administrasi pemenuhan hak dan kewajiban pajak yang dianggap tidak sederhana dan memakan waktu serta biaya.

Tax Dispute Tax Dispute atau Sengketa Pajak berarti setiap perselisihan oleh otoritas Pajak dengan Wajib Pajak atau sebaliknya (termasuk melalui penerbitan penilaian atau substansi dalam surat menyurat yang resmi diterbitkan otoritas pajak) yang menyatakan bahwa kewajiban Pajak dapat timbul atau bahwa Keringanan Pajak mungkin tidak tersedia lagi untuk dibahas antara kedua belah pihak.

Tax Dodge Tax Dodge adalah suatu praktik ilegal atau bertentangan dengan hukum perpajakan yang berlaku untuk mengurangi jumlah beban pajak yang harus dibayar oleh Wajib Pajak dalam suatu kurun waktu tertentu.

Tax Effect Tax Effect merupakan istilah untuk menggambarkan konsekuensi berupa pajak yang harus dibayar akibat penerapan skenario atau metode tertentu untuk kepentingan menghitung utang pajak atau beban pajak yang harus dibayar. Tax Effect juga kerap digunakan untuk menggambarkan beban pajak yang muncul akibat pengenaan pajak atas seluruh penghasilan yang baru terdeteksi oleh otoritas dikurangi pajak atas penghasilan yang telah dilaporkan di dalam Surat Pemberitahuan pajak.

Tax Effort Tax Effort merupakan suatu angka untuk menunjukkan perbandingan antara nilai penerimaan pajak secara riil terhadap total potensi penerimaan pajak dalam satu periode yang sama di suatu negara atau yurisdiksi. Penggunaan angka dalam Tax Effort memungkinkan pengelompokkan negara menjadi berbagai kategori berikut: low tax collection, low tax effort; high tax collection, high tax effort; low tax collection, high tax effort; and high tax collection, low tax effort.

Tax Enforcement Tax Enforcement adalah tindakan untuk menerapkan hukum perpajakan yang diamanatkan di dalam ketentuan perpajakan suatu otoritas pajak sebuah negara atau yurisdiksi. Tujuan tax enforcement adalah untuk meningkatkan kepatuhan Wajib Pajak dalam memenuhi hak dan kewajiban perpajakannya, meningkatkan penerimaan pajak, dan menciptakan budaya patuh pajak di masyarakat. Tax Enforcement dilakukan dengan penerapan pengenaan sanksi administrasi dan pidana secara tegas dan adil kepada Wajib Pajak yang melanggar ketentuan perpajakan.

Tax Environment Tax Environment merupakan kebijakan untuk mengenakan pajak atas aktifitas bisnis dan atau aktifitas keseharian masyarakat yang berpotensi mencemari lingkungan dengan berbagai bentuk.

Tax Equity Tax Equity adalah prinsipi keadilan dalam pengenaan pajak. Dengan maksud agar pembebanan pajak kepada Wajib Pajak/ masyarakat harus mengedepankan semangat persamaan beban dan pertimbangan kemampuan.

Tax Evasion Tax Evasion adalah suatu upaya untuk dengan sengaja melanggar ketentuan perpajakan yang berlaku dengan maksud untuk tidak membayar pajak atau membayar dengan jumlah yang lebih rendah daripada yang seharusnya dibayar. Tax Evasion dipandang mengandung aspek tindak pidana di bidang perpajakan.

Tax Exemption Tax Exemption atau Pembebasan pajak adalah pengurangan atau penghapusan kewajiban untuk melakukan pembayaran wajib yang semula dikenakan oleh otoritas pajak kepada Wajib Pajak atas perolehan penghasilan oleh melalui orang, properti, pendapatan, atau transaksi.

Tax Exhaustion Tax Exhaustion merujuk pada batas maksimal kemampuan Wajib Pajak atau Orang Pribadi dalam memenuhi kemampuan membayar pajak. Batas maksimal sebagaimana dimaksud mencakup jumlah nominal uang yang paling banyak dibayarkan oleh Wajib Pajak.

Tax Exile Tax Exile merujuk pada status orang pribadi atau badan hukum yang memutuskan semua ikatan yang membuatnya menjadi penduduk fiskal di negara tertentu dan pindah ke yurisdiksi lain karena alasan pajak.

Tax Expenditure Tax Expenditure atau Belanja Pajak adalah ketentuan khusus dari peraturan pajak yang mengatur beberapa ketentuan seperti pengecualian, pemotongan, penangguhan, kredit, dan tarif pajak yang menguntungkan kegiatan atau kelompok pembayar pajak tertentu. Dengan demikian, pengeluaran pajak seringkali merupakan alternatif dari program atau peraturan pengeluaran langsung untuk mencapai tujuan yang sama

Tax Expense Tax Expense atau belanja untuk membayar pajak adalah akun tertentu di dalam laporan keuangan Wajib Pajak yang menunjukkan jumlah pajak yang dibayar oleh Wajib Pajak dalam suatu periode tertentu. Dengan kata lain, Tax Expense didefinisikan dari sudut pandang Wajib Pajak.

Tax Firm Tax Firm merupakan sebuah bentuk usaha profesional di bidang perpajakan yang dijalankan oleh para profesional yang memiliki keahlian dan pengalaman di bidang perpajakan untuk memberikan bantuan profesional kepada Wajib Pajak dan masyarakat dalam memenuhi hak dan kewajiban perpajakannya. Keberadaan Tax Firm menjadi jembatan antara Wajib Pajak dengan otoritas pajak sehingga ketika berjalan dengan baik, Tax Firm dapat membantu terwujudnya komunikasi yang baik antara otoritas pajak dengan Wajib Pajak.

Tax Free Tax Free adalah sebuah kondisi dimana sebuah transaksi bisnis yang dijalankan Wajib Pajak tidak dikenai pajak sama sekali dikarenakan transaksi bisnis tersebut menggunakan skema yang memang secara legal tidak dikenai pajak atau dapat pula karena penghasilan yang diperoleh memang tidak termasuk objek pajak yang dikenai pajak.

Tax Gap Tax Gap merupakan istilah untuk menggambarkan jumlah selisih pajak yang terkumpul tepat waktu sebagai penerimaan negara dengan jumlah pajak terutang. Tax Gap muncul sebagai istilah untuk menjelaskan jumlah persentase utang pajak yang belum kadaluarsa namun belum tertagih.

Tax Home Tax Home adalah sebuah istilah untuk menjelaskan kondisi tempat kerja atau jabatan rutin wajib pajak, di mana pun wajib pajak memiliki rumah keluarga.

Tax Haven Tax Haven atau Surga pajak dalam pengertian “klasik” mengacu pada negara yang mengenakan pajak rendah atau tidak ada pajak, dan digunakan oleh perusahaan untuk menghindari pajak yang jika tidak, akan dibayarkan di negara asal dengan pajak tinggi. Menurut laporan OECD, tax havens memiliki karakteristik utama sebagai berikut; Tidak ada atau hanya pajak nominal; Kurangnya pertukaran informasi yang efektif; Kurangnya transparansi dalam pelaksanaan ketentuan legislatif, hukum atau administratif.

Tax Holiday Tax holiday adalah kebijakan hukum yang secara resmi dikeluarkan oleh otoritas pajak suatu negara/yurisdiksi yang menawarkan periode pembebasan pajak penghasilan untuk jenis usaha baru atau usaha tertentu guna mengembangkan atau mendiversifikasi industri dalam negeri.

Tax Hell Tax Hell atau Neraka Pajak merujuk pada negara/yurisdiksi dengan tarif pajak yang sangat tinggi. Dalam beberapa definisi, neraka pajak juga berarti birokrasi pajak yang menindas atau memberatkan. Di Amerika Serikat, negara bagian dengan tarif pajak yang sangat tinggi adalah Wisconsin, yang secara geografis berdekatan dengan Minnesota dan North Dakota.

Tax Incentives Tax Incentives atau Insentif Pajak adalah kebijakan yang secara resmi dirilis oleh otoritas pajak suatu negara/ yurisdiksi dalam bentuk pembebasan pajak, pengurangan tarif pajak, atau pajak ditanggung negara dengan maksud untuk membantu perkembangan bisnis, kelancaran likuiditas, atau meningkatkan kepatuhan pajak. Tax Incentives diberikan dalam jangka waktu tertentu, dengan kata lain, bukan merupakan sebuah kebijakan yang tetap

Tax Incidences Tax Incidences atau insiden pajak adalah istilah ekonomi untuk memahami pembagian beban pajak antara pemangku kepentingan, seperti pembeli dan penjual atau produsen dan konsumen. Insiden pajak juga dapat dikaitkan dengan elastisitas harga penawaran dan permintaan.

Tax Inclusives Tax Inclusives berarti pajak sudah menjadi bagian dari harga eceran produk, jadi tidak ada lagi pajak yang ditambahkan ke subtotal dari transaksi penjualan. Sedangkan Tax Exclusive artinya pajak diterapkan di atas harga satuan.

Tax Increment Tax Increment adalah istilah dalam keuangan publik. Tax Increment adalah sebuah metode untuk menjadikan pajak sebagai salah satu alat untuk mendukung proyek pengembangan kembali kegiatan perekonomian di suatu wilayah dengan menggunakan dana pajak yang diperkirakan dapat dikumpulkan dari properti atau objek pajak di wilayah tersebut sepanjang kurun waktu tertentu. Pembiayaan melalui kenaikan pajak/ Tax Increment dapat pula dimaknai sebagai metode pembiayaan publik yang dapat digunakan sebagai subsidi untuk pembangunan kembali, infrastruktur, dan proyek peningkatan masyarakat lainnya di banyak negara, termasuk Amerika Serikat.

Tax Intelligence Tax Intelligence adalah sebuah istilah untuk mengoptimalkan semua sumber daya berupa informasi, teknologi, jejaring relasi, dan sumber daya manusia dalam melakukan pendalaman untuk kepentingan penelurusan kondisi subjektif dan objektif Wajib Pajak, pengujian kepatuhan pajak, penegakan hukum perpajakan, dan penyusunan profil Wajib Pajak. Di banyak otoritas pajak di berbagai negara/yurisdiksi, Tax Intelligence telah dilembagakan menjadi unit yang secara resmi menjalankan fungsi-fungsi intelijen.

Tax Investigations Tax Investigations adalah suatu mekanisme penegakan hukum pajak yang dilakukan oleh petugas pajak dengan jabatan tertentu dengan maksud untuk membuktikan unsur pidana dari tindak pidana perpajakan yang disangkakan kepada Wajib Pajak.

Tax Invoices Tax Invoices atau Faktur Pajak adalah dokumen tertulis yang diterbitkan dan dibuat oleh Wajib Pajak penjual kepada Wajib Pajak pembeli yang menunjukkan deskripsi, jumlah, nilai barang dan jasa serta pajak yang dibebankan. Faktur Pajak diterbitkan, lazimnya, jika barang dijual dengan maksud untuk dijual kembali oleh pembeli.

Tax Laws Tax Laws atau hukum pajak adalah seperangkat aturan dan ketentuan yang mengatur dan menetapkan perihal bagaimana, kapan, dan berapa banyak pajak yang harus dibayar ke otoritas pajak di setiap jenjang dan ketentuan yang berlaku.

Tax Loopholes Tax Loopholes adalah celah-celah yang dapat dimanfaatkan dalam undang-undang, pengaruh tax avoidance (penghindaran pajak) untuk meminimalkan beban pajak.

Tax Lien Tax Lien adalah notifikasi berupa klaim resmi yang disampaikan oleh pemerintah atas aset berupa properti yang dimiliki Wajib Pajak yang belum membayar Pajak Penghasilan setelah lampau jatuh tempo yang ditetapkan. Ketika notifikasi atau Tax Lien telah disampaikan atau ditetapkan pemerintah, maka Tax Lien dapat dihapus dengan cara Wajib Pajak membayar tagihan pajak yang terutang yang mana jika tidak dilakukan pembayaran maka atas aset yang telah diberi notifikasi Tax Lien dapat dilakukan penyitaan.

Tax Liability Tax Liability adalah jumlah uang yang menjadi utang pajak yang harus dibayar ke otoritas pajak/ pemerintah, Tax Liability mencerminkan jumlah pajak secara keseluruhan yang harus dilakukan pelunasan ke pemerintah oleh Wajib Pajak

Tax Liability Tax Litigation berarti setiap klaim, tindakan hukum, persidangan, gugatan, litigasi, penuntutan, penyelidikan, arbitrase atau proses penyelesaian sengketa lainnya, atau proses administratif atau pidana, atau tindakan otoritas pajak (atau penilaian, keputusan, perintah, perintah atau keputusan yang berkaitan dengan salah satu dari hal tersebut di atas) yang berkaitan dengan pajak.

Tax Multiplier Tax Multiplier menunjukkan ukuran sebuah perubahan Pendapatan Domestik Bruto (PDB) yang dapat terjadi ketika pemerintah melakukan penyesuaian melalui kebijakan pajak. Kompleksitas Tax Multiplier ditentukan oleh lingkup perubahan yang dilakukan, apakah hanya berkaitan dengan konsumsi atau seluruh komponen PDB.

Tax Morale Tax Morale adalah ukuran yang menunjukkan persepsi dan sikap Wajib Pajak terhadap kewajiban membayar pajak dan kecenderungan untuk menghindari pajak. Ada sejumlah faktor yang mempengaruhi Tax Morale antara lain usia, tingkat pendidikan, jenis kelamin, dan tingkat kepercayaan terhadap pemerintah.

Tax Neutrality Tax Neutrality merujuk pada sebuah konsep/ sistem yang membuat pajak tidak menjadi unsur yang mempengaruhi keputusan individu atau korporasi dalam mengambil keputusan berkenaan dengan bisnis, investasi, atau hal lainnya. Ide dasar dari konsep Tax Neutrality adalah sikap pemerintah untuk mendorong berjalannya kegiatan ekonomi oleh pelaku bisnis tanpa dibebani oleh sistem perpajakan yang dianggap dapat memberatkan.

Tax Nexus Istilah “nexus” dalam Tax Nexus digunakan dalam undang-undang perpajakan untuk menggambarkan situasi di mana bisnis dapat terdampak oleh pajak di negara atau yurisdiksi tertentu. Nexsus pada dasarnya adalah hubungan antara otoritas perpajakan dan entitas yang harus memungut atau membayar pajak.

Tax Ombudsman Tax Ombudsman merujuk pada lembaga khusus yang dibentuk otoritas pajak dengan maksud untuk menerima keluhan, kritik, dan saran, serta pengaduan dari Wajib Pajak terkait kualitas pelayanan dan pelaksanaan administrasi hak dan kewajiban perpajakan. Tax Ombudsman mengeluarkan rekomendasi yang bersifat tidak mengikat untuk dilaksanakan otoritas perpajakan.

Tax Penalty Tax Penalty atau denda pajak yang diberlakukan pada Wajib Pajak individu atau korporasi karena tidak membayar cukup atau tidak membayar secara keseluruhan dari perkiraan total pajak terutang atau pajak yang telah dilakukan pemotongan. Jika Wajib Pajak mengalami hal tersebut sehingga menimbulkan kurang bayar atau tidak membayar sama sekali dari total taksiran pajak, mereka mungkin diharuskan membayar denda.

Tax Potential Tax Potential atau potensi pajak adalah jumlah maksimum penerimaan pajak yang mungkin dapat diupayakan dan ditingkatkan pemerintah dalam satu rentang waktu sesuai dengan karakteristik-karakteristik yang dapat diidentifikasi.

Tax Planning Tax Planning adalah proses menganalisis rencana keuangan atau situasi dari sudut pandang pajak dengan maksud untuk memastikan dapat dicapainya efisiensi beban pajak yang harus dibayar tanpa melanggar ketentuan perpajakan yang berlaku.

Tax Policy Tax Policy merupakan suatu pilihan (kebijakan) yang diambil pemerintah berkaitan dengan jenis pajak yang dikenakan, besaran tarif dan jumlah yang ditagihkan, dan subjek pajak yang dibebani kewajiban pajak dimaksud.

Tax Practice Tax Practice merupakan istilah untuk menyebutkan kegiatan yang berkenaan dengan administrasi perpajakan, lazimnya istilah ini merujuk pada kegiatan penyediaan jasa praktik pemenuhan hak dan kewajiban perpajakan oleh profesional di bidang perpajakan, khususnya konsultan pajak

Tax Preparer Tax Preparer adalah profesional yang berkualifikasi untuk menghitung, menyampaikan/ melaporkan, dan menandatangani Surat Pemberitahuan (SPT) atas nama Wajib Pajak individu/ orang pribadi atau korporasi/ bisnis.

Tax Provision Tax Provision adalah proses menyusun estimasi jumlah yang pajak yang harus dibayar oleh Wajib Pajak pada tahun pajak yang bersangkutan. Proses tersebut mencakup penghitungan nilai pajak yang harus dibayar dan yang ditangguhkan (aset dan kewajiban pajak tangguhan).

Tax Principles Tax Principles merupakan panduan yang menjadi petunjuk otoritas pajak dalam merumuskan kebijakan perpajakan. Tax Principles tersebut dirumuskan oleh pakar di bidang perpajakan yang biasanya masih dianggap relevan sampai dengan kurun waktu tertentu.

Tax Progressivity Tax Progressivity adalah sebuah mekanisme penerapan tarif pajak yang meningkat seiring dengan kenaikan penghasilan Wajib Pajak. Lawan dari mekanisme ini adalah Tax Regressivity dimana pajak dikenakan dengan tarif yang sama meskipun penghasilan Wajib Pajak bertambah.

Tax Proposal Tax Proposal merupakan bagian yang tidak terpisahkan dari Tax Reform, dimana otoritas pajak, setelah menimbang berbagai rekomendasi dan evaluasi, mengajukan suatu proposal kebijakan perpajakan yang dianggap mampu memberikan solusi atas sejumlah permasalahan yang dialami pada periode sebelumnya.

Tax Ratio Tax Ratio atau tax-to-GDP ratio adalah sebuah ukuran yang menunjukkan dalam perbandingan antara jumlah total penerimaan pajak suatu negara yang dapat dikumpulkan dalam satu tahun pajak terhadap ukuran total kegiatan perekonomiannya yang dinyatakan dalam Produk Domestik Bruto atau PDB

Tax Rebellion Tax Rebellion merupakan tindakan untuk secara terbuka menentang kebijakan perpajakan dengan menunjukkan perlawanan dengan tidak memenuhi kewajiban untuk mematuhi ketentuan perpajakan baik formal maupun material. Di Amerika Serikat, Tax Rebellion secara simbolik ditandai dengan peristiwa Boston Tea Party, yakni sebuah peristiwa yang terjadi tanggal 16 Desember 1773, di mana kolonialis Amerika yang melakukan protes karena mereka harus membeli teh dari Britania Raya dan harus membayar pajak. Mereka lalu membuang teh-teh itu ke Pelabuhan Boston di Boston Harbor, Boston, Massachusetts, USA.

Tax Reform Tax Reform adalah proses untuk mengubah kebijakan berkenaan dengan mekanisme pengenaan dan pemungutan pajak oleh pemerintah dan lazimnya dilaksanakan dengan maksud untuk meningkatkan kualitas administrasi perpajakan atau untuk mendorong aktifitas sosial dan ekonomi menjadi lebih baik.

Tax Regimes Tax Regimes merujuk pada sebuah corak, ciri khas, atau karakteristik kebijakan perpajakan suatu negara/ yursdiksi ketika di bawah rezim pemerintah/ penguasa dalam rentang waktu tertentu. Setiap masa pemerintahan dapat menjalankan kebijakan perpajakan yang berbeda-beda, tergentung keputusan yang ditetapkan pemerintah yang berkuasa saat itu.

Tax Research Tax Research, dalam dunia profesional para konsultan pajak, digunakan untuk menunjukkan aktivitas menemukan dasar hukum dalam membangun sikap untuk menanggapi suatu kebijakan perpajakan. Dalam dunia ilmiah, Tax Research merupakan aktifitas untuk melakukan penelitan isu tertentu dengan metode yang baku dengan maksud untuk membuktikan hipotesis yang dibangun dengan dugaan atau asumsi.

Tax Resistence Tax Resistence merujuk pada sikap yang mencirikan keengganan dalam mematuhi kewajiban perpajakan, sikap tersebut tercermin dalam bentuk perlawanan baik pasif maupun aktif. Tax Rebellion adalah salah satu bentuk Tax Resistence berupa perlawanan aktif.

Erikson Wijaya Telah berkarir sebagai pegawai Ditjen Pajak Kemenkeu sejak tahun 2006, dan saat ini tengah berstatus sebagai Pegawai Tugas Belajar di University of Minnesota, USA untuk program Master of Business Taxation (MBT)

Noris Andika Pane Telah berkarir sebagai pegawai Ditjen Pajak Kemenkeu selama 15 tahun, dan saat ini tengah berstatus sebagai Account Representative (AR) di KPP Pratama Kisaran yang merupakan KPP di lingkungan Kanwil DJP Sumatera Utara II

Istilah Pajak Dalam Bahas Inggris

Seringkali kita mencari padanan istilah pajak dalam bahasa Inggris. Ya, karena kita belajarnya di Indonesia sehingga saat mau diterjemahkan ke dalam bahasa Inggris, kita mencari istilah baku.

Menteri Keuangan telah menetapkan istilah-istilah baku dalam bahasa Indonesia dan bahasa Inggris. Istilah-istilah dimaksud ada dalam lampiran Keputusan Menteri Keuangan nomor nomor 914/KMK.01/2016 tentang Standar Terminologi/Istilah dalam Bahasa Inggris di Lingkungan Kementerian Keuangan.

Dalam beleid ini terdapat 1295 istilah yang biasa digunakan di lingkungan Kementerian Keuangan. Termasuk istilah-istilah baku perpajakan.

Berikut lampiran dimaksud :

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Author: Raden Agus Suparman

Pegawai DJP sejak 1993 sampai Maret 2022. Konsultan Pajak sejak April 2022. Alumni magister administrasi dan kebijakan perpajakan angkatan VI FISIP Universitas Indonesia. Perlu konsultasi? Sila kirim email ke [email protected] atau 08888110017 Terima kasih sudah membaca tulisan saya di aguspajak.com Semoga aguspajak menjadi rujukan pengetahuan perpajakan. View all posts by Raden Agus Suparman

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Definisi Manajemen Perpajakan (Tax Management)

Oleh Rachel Yolanda Pratiwi S 27/01/2023, 10:00 1.8k Views 1 Vote 0 Comments

Definisi manajemen perpajakan ( tax management ) adalah usaha menyeluruh yang dilakukan manajer pajak ( tax manager ) dalam suatu perusahaan atau organisasi. Sehingga, hal-hal yang bersangkutan dengan perpajakan dari perusahaan atau organisasi tersebut dapat dikelola dengan baik, efisien dan ekonomis dan memberi kontribusi maksimal bagi perusahaan. Tujuan manajemen pajak dapat dicapai melalui fungsi-fungsi manajemen pajak yang terdiri dari:

• Perencanaan Pajak ( tax planning );
• Pelaksanaan kewajiban perpajakan ( tax implementation )
• Pengendalian Pajak ( tax control ).

Seperti yang sudah dibahas sebelumnya, perencanaan pajak ( tax planning ) adalah suatu alat dan suatu tahap awal dalam manajemen pajak ( tax management ), yang berfungsi untuk menampung aspirasi yang berkembang dari sifat dasar manusia. Secara definitive, manajemen pajak memiliki ruang lingkup yang lebih luas dari sekedar tax planning. Sebagai manajemen pajak, pastilah hal tersebut tidak terlepas dari konsep manajemen secara umum yang merupakan upaya-upaya sistematis yang meliputi:

• Perencanaan ( planning )
• Pengorganisasian ( organizing )
• Pelaksanaan ( actuating ) dan
• pengendalian ( controlling ).

Semua fungsi manajemen tersebut tercakup dalam manajemen pajak. Dengan kata lain, manajemen perpajakan merupakan segenap upaya untuk mengimplementasikan fungsi-fungsi manajemen agar pelaksanaan hak dan kewajiban perpajakan berjalan efisien dan efektif. Dalam melaksanakan fungsi manajemen pajak, perencanaan pajak merupakan tahap pertama dalam urutan hierarki. Dalam praktik bisnis, istilah tax planning lebih popular dari pada tax management itu sendiri.

Praktik pendekatan yang dilakukan dalam implementasi tax planning  ini bersifat multidisipliner, sehingga wajar bila seorang perencana pajak yang baik ( tax planner ) harus memiliki wawasan dan pengetahuan yang luas dan selalu memperbarui setiap ketentuan, termasuk perubahannya dari waktu ke waktu.

Tax Planning adalah suatu proses mengorganisasi usaha wajib pajak sedemikian rupa, agar utang pajaknya berada dalam jumlah minimal, selama hal tersebut tidak melanggar undang-undang. Kemudian, perencanaan pajak dimulai dengan menyiapkan semua data yang diperlukan dan format penyajiannya, memerhatikan setiap pembayaran dan pelaporan pajak setiap masa pajak dan setiap akhir tahun pajak, dan mengawasi rekonsiliasi laporan keuangan komersial dan fiskal.

Setelah semua ini dilakukan dengan baik berdasarkan peraturan perpajakan dan memiliki pemahaman yang baik tentang keadaan perusahaan, dapat diterapkan suatu strategi manajemen perpajakan seefisien mungkin. Hal ini yang perlu diperhatikan adalah mengatur cash flow perusahaan seefektif mungkin dengan tetap memerhatikan ketentuan perpajakan.

Ada beberapa manfaat yang bisa diperoleh dalam perencanaan pajak yang dilakukan secara cermat, yaitu:

• penghematan kas keluar, sebab beban pajak yang merupakan unsur biaya dapat dikurangi;
• pengatur aliran kas masuk dan keluar ( cash flow ), sebab perencanaan pajak yang matang bisa memperkirakan kebutuhan kas untuk pajak dan menentukan saat pembayaran. Sehingga, perusahaan dapat menyusun anggaran kas secara lebih akurat.

Secara umum tujuan pokok yang ingin dicapai dari manajemen pajak atau perencanaan pajak yang baik adalah:

• Meminimalkan beban pajak yang terutang;

Tindakan yang harus diambil dalam rangka perencanaan pajak tersebut adalah usaha untuk melakukan efisiensi beban pajak yang masih dalam ruang lingkup pemajakan, yang tidak melanggar peraturan perpajakan.

• Memaksimalkan laba setelah pajak;
• meminimalkan terjadinya kejutan pajak ( tax surprise ) jika terjadi pemeriksaan pajak oleh fiskus;
• memenuhi kewajiban perpajakan secara benar, efisien dan efektif sesuai dengan ketentuan perpajakan.

Ditulis oleh

Rachel Yolanda Pratiwi S

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A key issue in the literature on fiscal federalism is the question of how subnational authorities might best be financed. This complex issue has no easy solutions, given the wide variety of systems actually applied in different countries and at different times in specific countries. Although there is no ideal system of financing state or regional and local governments, because every country faces different problems and different perspectives, some basic objectives may provide broad guidelines on how tax assignment can best be carried out. Tax assignment can hardly be looked at in isolation. It is an issue intimately related to the question of expenditure assignments across different levels of government, which was discussed in detail in Chapter 2. Even a carefully designed system of intergovernmental expenditure allocation will not work satisfactorily unless it is supported by an equally well-thought-out financing system, and vice versa.

A key issue in the literature on fiscal federalism is the question of how subnational authorities might best be financed. This complex issue has no easy solutions, given the wide variety of systems actually applied in different countries and at different times in specific countries. Although there is no ideal system of financing state or regional and local governments, because every country faces different problems and different perspectives, some basic objectives may provide broad guidelines on how tax assignment can best be carried out. Tax assignment can hardly be looked at in isolation. It is an issue intimately related to the question of expenditure assignments across different levels of government, which was discussed in detail in Chapter 2 . Even a carefully designed system of intergovernmental expenditure allocation will not work satisfactorily unless it is supported by an equally well-thought-out financing system, and vice versa.

This chapter focuses on the questions to be addressed when decisions are being made on tax assignment among different levels of government. The term “tax assignment” here describes the level of government responsible for determining the level and rate structure of various taxes, whether their revenue is to be collected or received by that level, or shared with others.

• Tax Assignment and Tax Sharing

The general principles of decentralization must guide the assignment of taxes to different levels of government. According to these principles, as laid out in the traditional local finance literature, regional and local governments should ideally fulfill mainly allocational functions by providing services that accrue primarily to the local population, services whose costs the local constituency bears as far as possible. In the same vein, because of the degree of openness of local economies, the literature on fiscal federalism argues in favor of limiting regional and local government roles in economic stabilization, as well as in distributional policies.

In very broad terms, the assignment of funds to local jurisdictions may in principle follow one of three options. The first, and probably least attractive, option assigns all tax bases to local jurisdictions and then requires them to transfer upward part of the revenue to allow the national government to meet its spending responsibilities. As this option may hinder effective income redistribution across the national territory, as well as the effectiveness of fiscal stabilization, it may not represent the most efficient way of raising public resources and may provide inadequate incentives for the local jurisdictions to participate in the financing of the national economy. This system resembles that previously in force in the former Yugoslavia and is somewhat similar to the system of negotiated tax-sharing previously practiced in Russia. The system previously in force in China, generally recognized to have inhibited the government’s ability to pursue stabilization policies, had analogous features to this extreme model.

A second option, on the other extreme, is to assign all taxing powers to the center, and then finance subcentral governments by grants or other transfers, either by sharing total revenue or by sharing specific taxes. The main disadvantage of this option is that it completely breaks the nexus between the level of tax revenue collected and the decisions to spend that revenue, which constitute the basic prerequisite for a multilevel governmental system that enhances efficiency. Without this connection, the risk is that fiscal illusion will lead to overprovision of local government services. Also, because of the risk of frequent, discretionary cuts in transfers to local levels of governments, this system could also make it difficult to establish a stable system of service provision at the local level. This kind of system bears some resemblance to that once applied in the former Soviet Union and in Hungary. Substantial grant financing of local governments is still practiced in a number of industrial countries, such as France, Italy, and the Netherlands.

The third broad option is the more normal one of assigning some taxing power to the local jurisdictions, if necessary (that is, if vertical imbalances persist) complementing the revenue raised locally with tax-sharing arrangements or other transfers from the central government. This option leads directly to the question of which taxes should be assigned to local jurisdictions and which taxes should remain the responsibility of the national government (the tax assignment problem). By assigning taxes and thus letting the local jurisdictions bear the tax burden at the margin associated with expenditure decisions, the budgetary actions of local governments will be guided by tax-benefit considerations and will in this way improve economic efficiency. 1

The tax assignment problem is typically not an either/or problem with a specific tax placed clearly and solely under the responsibility of either the local, the state, or the central government: rather, in reality (for most taxes) a spectrum of different designs exists ranging from full and complete local autonomy to systems with some local discretion and to others with no local autonomy whatsoever. In other words, even if a specific tax, such as an income tax, has been assigned to the local level because it is found to satisfy the criteria for a “good local tax” (see below), it is possible to design the income tax with varying levels of local revenue autonomy. Table 1 illustrates this important point in a very general way by providing a ranking of different tax designs with respect to the degree of autonomy that they leave with the local governments. For the sake of illustration, the table also includes the main nontax sources of revenues for local governments, although obviously a ranking of this nature can only be broadly indicative.

Fiscal Autonomy in Subcentral Governments

Complete local fiscal autonomy over revenues requires in principle that local governments can change tax rates and set the tax bases. In many countries, however, the central government either defines local tax bases or sets relatively narrow limits to the capacity of local governments to influence the tax base. In some countries (for example, Norway), the central government also sets out limits to the possible variation of local government tax rates.

Taxes assigned to lower levels of government may take the form of own taxes (sometimes referred to as tax separation systems), defined as taxes accruing solely to lower levels of governments, which can determine the rate and, in some cases, also have some autonomy to influence the tax base. An alternative system is represented by overlapping taxes (sometimes called piggybacking systems of local taxation) with the same (or almost the same) tax base for the different levels of government, but with the right of each level of government to set its own tax rate on that common base. This is the system of personal income taxes applied in, for example, the Nordic countries. In Canada, the income tax system used by the provinces involves levying the tax as a percentage of the federal tax revenue accruing within each province. As opposed to tax separation systems, a system of overlapping taxes may involve administrative advantages with regard to assessing the base and to tax collection. This, however, may be at a potential cost of reduced transparency as the tax levied at each level of government may be less easily identifiable for the taxpayers.

Some, in particular federal, countries prescribe in their constitution the system of tax assignment to be applied. Thus, in India, the Constitution prevents overlapping tax powers so that one type of tax can be levied by only one level of government. Likewise, the modalities of local government taxing powers are specified in the Constitutions of Nigeria and Brazil. In Switzerland, the federal government is prohibited by law from imposing indirect taxes, whereas in Australia a similar rule applies for the states.

The question of local fiscal autonomy may be considered almost completely independent from the question of who actually administers and collects the tax. The allocation of these tasks should be determined on the basis of where they can be carried out most efficiently, although one consideration may be that local accountability may be encouraged if the tax is assessed and collected locally.

Probably the single most critical issue in the discussion of subcentral fiscal autonomy, when looked at from the tax side, is whether the authorities concerned can determine their own tax rates. It could be argued that the case for local discretion, as far as the tax base is concerned, should be limited, because changing tax base definitions (for example, by allowing local governments to set individually the amount of a basic allowance, to introduce special tax reliefs, or to exempt specific sources of income or groups of taxpayers) could lead to distortions in the allocation of resources across localities, and also could have important redistributional consequences—an area in which local autonomy is generally believed to be unwarranted. If local governments cannot alter their tax rates, they cannot alter the level of their services in accordance with local preferences. In some countries, subcentral authorities rely mainly on taxes whose rates are fixed by the central government (for example, the countries with extensive tax-sharing arrangements, such as Portugal and Germany) or whose rate is subject to a ceiling. (Norway is a special case in this regard in that all local governments apply the ceiling rate of the local income tax.)

The importance attached to a lack of discretion in local tax policy depends mainly on the role subcentral authorities are supposed to play. To the extent that they are seen mainly as agents, implementing the policies laid down by other tiers of government, their limited autonomy with respect to tax policy would not appear to be serious. In contrast, if they are meant to implement their own expenditure programs and independently set their service levels in accordance with local preferences, their inability to determine tax rates and thus the level of their own revenues is a serious problem owing to the potential conflict between expectations, needs, and wishes of the local population, and the actual revenue potential available to local governments.

The main arguments against providing subcentral authorities with extensive fiscal autonomy center on the risk of increasing economic disparities between areas or localities and alleged restraints on central government macroeconomic control. Administrative simplicity or administrative economies of scale are also used as arguments for centralized taxes with a specific proportion of tax revenues being allocated to subordinate levels of government.

In what follows, the more specific aspects of tax assignment are dealt with by addressing the basic question of which taxes can be considered good candidates for state and local tax sources and which cannot. What characterizes a good local tax?

A Good Local Tax

A good local tax adequately supports a decentralized public expenditure system. The literature on fiscal federalism and local government finance 2 generally suggests that the following criteria and considerations should form the basis for decisions on which taxes can adequately be assigned to the subcentral level and which should remain at the national level.

To the extent that the tax in question is aimed at, and is suitable for, economic stabilization or income redistribution objectives, it should be left to the responsibility of the central government.

The base for taxes assigned to the local level should not be very mobile, otherwise taxpayers will relocate from high to low tax areas, and the freedom of local authorities to vary rates will be constrained. For this reason, general consumption taxes are found at subordinate levels of government only where geographical areas are very large (for example, Canada and the United States). Thus, the more mobile a tax base, the greater the presumption to keep it at the national level.

Tax bases that are very unevenly distributed among jurisdictions should be left to the central government.

Local taxes should be visible, in the sense that it should be clear to local taxpayers what the tax liability is, thereby encouraging local government accountability.

It should not be possible to “export” the tax to nonresidents, thereby weakening the link between payment of the tax and services received.

Local taxes should be able to raise sufficient revenue to avoid large vertical fiscal imbalances. The yield should ideally be buoyant over time and should not be subject to large fluctuations.

Taxes assigned to the local level should be fairly easy to administer or, in other words, the more important economies of scale in tax administration are for a given tax, the stronger the argument for leaving the tax base for that tax to the national level. Economies of scale may depend on data requirements, such as a national taxpayer identification number and computerization.

Taxes and user charges based on the benefit principle can be adequately used at all levels of governments, but are particularly suitable for assignment to the local level, inasmuch as the benefits are “internalized” to the local taxpayers.

This set of broad criteria translates into more specific recommendations regarding which taxes should be assigned to different levels of government, that is, which taxes may be considered good local taxes and which should be left in the domain of the central government. It is generally acknowledged in the literature 3 that the most obvious candidates as good local taxes are land or property taxes and, to some extent, personal income taxes. With some exceptions, turnover or consumption taxes, as well as taxes on capital income, in particular corporate income taxes, are generally considered less appropriate at the local level and in some cases also at the state level 4 because of the mobility of the corresponding tax bases. This broad conclusion derived from principles of local finance seems in very general terms to conform to the financing system actually found in most countries.

The following discussion addresses these questions on a tax-by-tax basis and is intended to cover all the main taxes to which tax assignment is applied in practice (disregarding whether these taxes according to the general principles are considered appropriate at subordinate levels of government or not). The treatment of the different taxes is also intended to be in descending order of importance for subordinate level of governments, although this ordering must necessarily be somewhat subjective (see Tables 2 and 3 ). 5

Distribution of Tax Revenue Among Different Levels of Government

1 Includes supernational authorities’ share of general government total tax revenue for Belgium (1.5 percent), France (0.7 percent), Germany (0.9 percent), the Netherlands (1.4 percent), and the United Kingdom (1.2 percent).

2 Data for general government do not include local government.

Distribution of Different Taxes Within Different Levels of Government

(In percent)

2 There are no state governments in unitary countries.

3 No data on local governments are available.

• Property Taxes

Property taxes, including in particular land taxes, have historically been widely used as subcentral taxes without any special regard to their alleged incidence. This is the outcome of the perceived advantages of the property tax as a local tax. With a property tax it is always clear which authority is entitled to the revenue it yields, which is not always so for income taxes and other taxes. Administration costs are generally found to be lower for a property tax (provided that there is a registry of properties with updated values) than for an income tax, which requires complex tax returns. The yield of a property tax can be predicted more accurately than for an income tax or a profits tax. Finally, some of the tax will be levied on businesses, which seems reasonable to the extent that businesses derive benefits from subcentral services, such as roads and other infrastructure services.

An additional argument for the use of property taxes is that, while almost all residents pay directly or indirectly (through rents) the property tax, thus avoiding free-rider problems in local service provision, this is not always the case for local income taxes. It has also been argued that property taxes are guided by the benefit principle of taxation to the extent that the corresponding spending by local governments benefits local properties by increasing their value. Against this view, it could be held that, although land and existing structures and thus the tax base cannot move in a physical sense, the tax base can do so in a fiscal sense via the capitalization of property taxes to the extent that property taxes are not used for purposes viewed as beneficial to property owners.

The main disadvantage of property taxes lies in the fact that they almost universally realize lower amounts than needed. There are many reasons for this, including the fact that it is a very visible tax (and thus politically unpopular), that it is perceived to have unwanted distributional consequences to the extent that the tax is borne by renters and not by owners of property, and that there are problems associated with the measurement of the tax base, including in particular the “correct” valuation of property, and its updating.

Some countries prefer to distinguish between residential property and commercial and industrial property, with the former being assigned to local taxation, and the latter either to local taxation with a uniform rate or to national taxation only (as is the case in some Nordic countries). In this regard, a particularly contentious issue in many countries (whether industrial, developing, or in transition) has been the taxation of agricultural land. In countries with a general income tax (including income from agriculture), a tax on land could be seen as a discriminatory surcharge on a basic factor input in one sector of the economy, rather than a local benefit tax. In countries without an income tax on agriculture, it has been argued that a land tax on agriculture impedes the development of this important foreign exchange earning sector. Whatever the merits of these arguments may be, the relatively modest tax burden on agriculture found in most countries (which is generally independent of the level of development of the countries in question) seems to reflect the political influence of this sector rather than economic principles or sound fiscal policies.

Other countries apply alternative criteria for the assignment of property taxes to different levels of government. In Brazil, for example, urban property is taxed at the municipal level, while the federal government levies and administers the tax on rural property.

More specifically, at least four important issues relate to the definition and measurement of the base upon which property taxes are levied: the coverage of the base, the use of capital or rental values, the number and nature of exemptions, and the frequency and methods of updating property values. The main issue regarding coverage has been whether land, improvements to land, and buildings should all be subject to tax. The systems applied vary substantially between countries, although most of the countries for which information is available include the unimproved value of land, the value of land improvements, and usually also the value of buildings. The efficiency and equity implications of property taxes have been intensively debated in the literature and will not be pursued further here (see McLure (1977) for an overview of the issues).

In principle, the impact of using rental values or capital values should be the same, assuming well-functioning property and capital markets. It has been argued, however, that there may be major differences in the actual outcome to the extent that rental values reflect mainly the current use of the property, while capital values are said to reflect the value of the property in the best alternative use. Also in this regard, actual methods vary between countries. Capital values are generally based upon market values, although some countries apply corrections to these market values (for example, use a specific proportion of the market value).

Most countries apply a large number of different reliefs under the property tax, for example, in the form of exemption of government property, highways, railways, and other transport or communication facilities, and mining, agriculture, and forestry industries. The subsidies implicit in this kind of treatment, not least with respect to agricultural land, have been increasingly criticized in a number of countries. As indicated above, many countries apply different tax treatment to residential and business property, with residential property usually subject to a more favorable treatment.

A particularly contentious problem in a number of countries has been the frequency and method used to update property values. Thus, in most developing countries, assessment of property values and updating seem to be the major issues. The unpopularity of this type of tax may in some countries be associated with infrequent updates of values, leading to large and abrupt increases in tax liabilities when updating actually takes place. Although property valuations are generally based on market prices, problems are also encountered during certain periods and in areas with modest turnover of property. State and central governments usually perform the valuation of property in order to achieve the necessary coordination between different areas, but the way in which and frequency with which it is done vary substantially across countries.

Although most of the revenue from property taxes generally accrues to subcentral levels of government, state or local governments do not always have complete discretion over the base or the rate. Central governments typically set the rules governing valuations and their frequency and determine exemptions and other reliefs. Also, the central government may impose restrictions on the variations in property tax rates. In practice, local government discretion may be limited in other ways, for example, in the form of earmarking of property revenues, or if higher rates adversely affect grants (as in the United Kingdom before 1989). In Italy, the central government sets a minimum rate for the property tax. If a municipality does not apply the floor rate, transfers to it from the central government are supposed to be reduced correspondingly. Thus, although most of the revenue from property taxes primarily accrues to subcentral authorities in most countries, the respective central governments are generally heavily involved in formulating and administering the provisions of the taxes.

• Personal Income Taxes

Most countries assign all or a large proportion of personal income taxes to the central government. Exceptions include the Scandinavian countries, Switzerland, the Baltic countries, Russia, and the other countries of the former Soviet Union. Generally, there are advantages as well as disadvantages of using personal income taxes at the subcentral level. Among the advantages is the fact that personal income taxes generally are buoyant and thus capable of raising the necessary revenue, and in addition they are believed not to fall on businesses, thereby avoiding the risk of subcentral authorities, anxious to attract new industry, indulging in tax-cutting competitions with adverse effects on services provided.

One of the main disadvantages of a local income tax as the main revenue raiser is the fact that, depending on the level of the tax threshold, many people may not pay the tax, although they receive local services. 6 This could have an adverse impact on the way a decentralized system works and has been used as an argument for supplementing an income tax with other tax sources, thereby including the majority of the local constituency in the local tax net. In this regard, two schools of thought may be distinguished. First, many countries (including, for example, most Mediterranean countries and Austria) seem to place considerable weight on income redistribution and on making income tax systems easy to administer by setting a high tax threshold, thereby excluding a large proportion of the population from the tax net. In contrast, other countries (such as New Zealand, Switzerland, and the Scandinavian countries) generally put more emphasis on the inclusion of most of the population in the tax net by setting relatively low tax thresholds, so that more people share the cost of public services.

In the context of financing local governments, there seems to be a case for making a distinction between schedular and global income taxes, since schedular income taxes can in some cases be used by local jurisdictions without great difficulties, in particular if the taxes on, for example, interest income, dividend income, and wages and salaries are withheld at source and constitute the final tax paid. However, the more developed is a country, the higher is the likelihood that individuals receive income from different sources, and furthermore that these incomes are derived from different jurisdictions. This may move countries to prefer a global income tax system in which the different income sources are added together for each individual and the tax liability is adjusted according to individual circumstances. 7 For such a system to work well at the local level, it requires flows of information on personal income received from other jurisdictions and thus poses the risk of tax evasion. Against this background, it may be better to leave a global income tax base with the national government, which is in a better position to acquire the necessary information.

However, such a system can be combined with revenue sharing, such as is the case in India, where the states receive about 85 percent of total income tax revenue, allocated on the basis of population, tax effort, and a measure of backwardness. In Brazil, 44 percent of the income tax revenue is transferred to lower level governments under a tax-sharing arrangement, and in Poland, in 1992, 15 percent of the personal income tax revenue was shared with local governments. As part of a recent reform of intergovernmental fiscal relations, shared personal income taxes have also been introduced in Hungary (in 1991, 50 percent of the revenue accrued to local governments). Similar tax-sharing arrangements were also important elements in the financing reform in China in 1980 (under the present financing arrangements, local governments receive all of the yields from personal income taxes).

Notwithstanding these considerations, and to the extent that the administrative capabilities are present at the national level, there is a fairly easy and cost-effective way of taxing a global income tax base in local jurisdictions, namely for the local jurisdictions to use the same statutory tax base as for the national income tax (that is, overlapping taxes or piggybacking). This solution, which reduces administrative as well as compliance cost, is actually used in a number of countries (such as, for example, the Nordic countries and Canada, where the provincial tax is levied as a percentage of the federal tax). 8 However, although it introduces an additional complexity to the tax and thus offsets at least in part some of the administrative savings, some of the countries applying this system (for example, the United States) also use specific tax reliefs in their state and local tax systems. Thus, the extent to which countries using overlapping income taxes coordinate the taxes levied at different levels varies considerably. In the Scandinavian countries and Canada, for example, there is a high degree of coordination, while coordination is lacking in Switzerland and the United States.

Generally, because the system requires a fairly advanced administrative system with up-to-date recording of taxpayers’ residence, overlapping personal income taxes are generally seen only in developed countries. Combined with an efficient equalization system, such a system is seen, in the countries that apply it, to ensure that variations in tax rates across jurisdictions reflect similar differences in locally determined service levels. Even in industrial countries, however, the administrative recording requirements have been used as an argument against the workability of local income taxes (which, for example, is the case in the United Kingdom).

A special case of overlapping personal income taxes (or partly overlapping income taxes, if some differences in tax bases are allowed) arises when local income taxes, as in the United States, are deductible from federal income tax liability (deductibility is not applied in the majority of countries using overlapping personal income tax systems). The rationale of such a system is the protection it provides for the taxpayer against excessive aggregate marginal tax rates as a result of high local income taxes. An unwarranted side effect may, however, be the incentive for local governments to expand their expenditures, partly financed—at the margin—by nonresidents. It may also reduce the overall level of progressivity of the tax system.

Taxes on income deriving from the activities of small business establishments or from agriculture may often be imposed as efficiently by local governments as national governments, and in some cases local governments may even possess more information than national governments. However, since record keeping by small establishments is often modest or even absent, taxation of such business income has in many cases to rely on presumptive income, based for example on gross sales, on the floor space in which the activity takes place, or on other criteria (for example, in Hungary, the local business tax is levied on the gross turnover of businesses at a maximum rate of 0.3 percent). Taxes on income from small businesses, from self-employed, and from agriculture, with the revenues accruing mostly or solely to local governments, are well known in a number of Central and Eastern European economies in transition, including Poland and Romania, as well as in a number of developing countries, such as India.

Notwithstanding which level of government actually receives the revenue of personal income taxes, practice differs substantially across countries with regard to which level is responsible for the assessment and for the collection of the income taxes at the subordinate level. National or central government responsibility, or—at the most—state responsibility, seems, however, to be the main rule owing principally to the economies of scale involved in the administration of these taxes.

• Sales Taxes

The popularity of assigning property taxes—and to some degree also income taxes—to subordinate levels of government is attributable in part to the fact that, with these taxes, differences in tax rates between areas are unlikely to cause serious problems owing to the relative immobility of the tax bases. In contrast, different sales tax rates between different jurisdictions can drive consumers (or rather their purchases) away from high tax areas, as is perhaps best reflected in the serious cross-border trade problems between countries with different tax systems and tax levels (such as between Canada and the United States, and between Ireland and the United Kingdom). A distinction must be made, however, between single-stage sales taxes, such as excises and retail taxes, and multistage sales taxes, such as turnover taxes and value-added taxes (VATs).

Retail sales taxes and excises levied on the final sale to the consumer can be given to local jurisdictions as a revenue source, provided that they do not levy these taxes with highly different tax rates. If they do, citizens will be encouraged to shop in other jurisdictions. The main factors determining the extent to which this will take place are the vicinity of other jurisdictions, the cost of travel, and the value of the goods purchased. 9 Another constraining factor for the use of such taxes at the local level with anything but a modest level of tax rates is the risk of tax evasion, which may be relatively more serious for these (single-stage) sales taxes, especially under high tax rates. However, the existence of, for example, both state and municipal sales taxes in many countries must reflect the fact that these caveats are not universally perceived as serious. Thus, in India, the main revenue source of the states is the sales tax. Turnover taxes and some excises are also important provincial revenue sources in Argentina.

A case can be made for distinguishing between excises on goods, which generally should be assigned to the central level to minimize tax exporting, and excises on selected services, consumed locally, and thus much less prone to tax exporting. Some countries, such as India, assign selected excises to the central government (combined with a tax-sharing scheme), and other excises to state and local governments. A number of countries use local excises or special taxes on automobiles or on fuels, which could be regarded as benefit taxes associated with the costs to local governments of maintaining roads. Municipalities in Brazil are allowed to levy a 3 percent tax on retail sales of fuels and gas. In Poland, own sources of revenue for local governments include a tax on automobiles.

Some countries combine earmarking sales taxes with tax assignment to different levels of government. In Russia, for example, a system of regional and federal road funds is in place, financed in part by excises on fuel and on vehicles, supplemented by taxes on registration and ownership of vehicles.

Sales taxes levied at the manufacturing level should, as a general rule, be assigned to the upper tier of government and to subordinate levels of government only where geographical areas are large.

There seems to be broad albeit not universal consensus in the literature that VATs are most appropriately assigned to the central level of government. This dictum rests on the fairly extensive administrative capabilities required to operate the tax (a requirement that is generally best met by central governments) in combination with the need to make the VAT neutral with respect to the spatial allocation of production and consumption, implying that—generally—the VAT should conform to the destination principle. 10 Implementation of this principle requires, however, border control between jurisdictions if the tax is to be levied by individual provinces or states. This would in most countries be neither feasible nor desirable because of the administrative costs implied and because of the impediments to the free flow of goods and services it would create. In addition, a subnational VAT system would pose problems with regard to which provinces or states should receive the revenues from VAT on imports, and which should bear the burden of VAT refunds on exports. 11 Following this kind of reasoning, comprehensive VATs should be left solely with the national government, as is, in fact, the case in most countries. In some countries (for example, China, Germany, and Russia), central VAT revenues may be shared with subnational levels, although this raises the same kind of problems referred to above, if the tax sharing is based on the derivation principle.

Similar considerations on different aspects of VAT design constitute important elements in the ongoing tax reform discussion in India, which contemplates introducing a comprehensive VAT to replace existing excises and sales taxes, with the aim of sharing the revenue between the three levels of government. However, one of the main questions is whether such a system could function properly without fundamental changes in the present system of intergovernmental fiscal relations in India. According to Bird (1993) , it could prove difficult to establish consensus on a formula distributing the VAT proceeds in a context of sharp regional inequalities as the one currently prevailing in that country. Bird also questions the rationale behind sharing the proceeds of any particular tax, because it would seem doubtful that the central government would go through the pain of increasing tax revenues that will accrue in large part to other governments. A more satisfactory alternative—according to Bird—would be to share with the states a fixed share of aggregate central tax revenues.

Brazil offers an example of a VAT assignment system that is generally believed to have had detrimental effects on economic performance. All three levels of government in Brazil are assigned taxing powers on consumption, but with different tax systems, and with the tax covering the widest base, the VAT-type ICMS assigned to state governments and not to the federal government. Furthermore, a large fraction of the federal government consumption tax (the IPI) is transferred to lower levels of governments under a tax-sharing arrangement. This particular design is believed to encourage tax competition between entities of government and to foster tax evasion, which is, furthermore, exacerbated by a large number of different tax rates and exemptions (see Chapter 18 for details).

• Corporate Profit Taxes

There seems to be almost universal agreement that the taxation of larger businesses, and in particular corporate profit taxes, should be left to the national level and to provinces or states only where these are very large (as in Canada). This reflects the fact that the economic activities of corporations are typically much more diversified and complex, with factor inputs originating from a number of jurisdictions (and possibly also from abroad), and with sales similarly going to a multitude of jurisdictions. Depending on the nature of the specific markets in question, local taxes on corporate profits would to a large degree be exported or shifted to other jurisdictions in a nontransparent way, thus rendering the associated tax burden almost imperceptible to local citizens. In addition, a high local-tax rate may lead the business entity in question to move the tax base to other jurisdictions, either by physically moving the corporation or by adjusting the internal transfer pricing arrangements.

Leaving the taxation of corporate profits entirely in the hands of local governments would thus create serious informational problems because of the administrative issues associated with the allocation of taxable profits between different jurisdictions in cases of enterprises with economic activity spread over many localities. But also in this case these problems could, at least in part, be overcome by some form of overlapping tax bases between the national and the local level (piggybacking), although the room for tax-rate variations is much smaller for the corporate profits tax than for personal income taxes. In Canada, the base is harmonized to a considerable degree between the provinces and the federal level (although provinces do have the possibility of providing individual investment incentives), while provinces have the flexibility to vary rates. In Brazil, the states can levy a 5 percent surcharge on the corporate income tax.

Some countries have, with the above-mentioned problems in mind, chosen instead to allocate a fixed portion of the profit tax revenue originating within each jurisdiction to the local governments under a tax-sharing arrangement. Thus, Russia allocates 25 percentage points of the 38 percent tax rate on corporate profits to regional governments, while the remaining 13 percentage points remain with the federation. 12 Of the corporate tax revenue in Poland in 1992, 5 percent was shared with local governments. In Nigeria, a special system is in force according to which the federal authority has the legal jurisdiction over the company tax, but the states nevertheless collect the tax and retain the proceeds.

• Payroll Taxes

Like VATs and corporate profit taxes, different types of payroll taxes are also generally seen as an appropriate revenue source for the central government only, because different payroll tax rates could drive employers, and jobs, away from high tax areas. In addition, tax exporting is probably significant in the sense that, first, part of the tax may be shifted to prices and thus borne by consumers outside the jurisdiction that receives the revenue, and, second, the tax may be levied on employees with residence outside the revenue-receiving jurisdiction. Thus, the tax may not be visible to the local taxpaying constituency, and the relationship may be weak between tax payments and services provided by jurisdictions. 13

Notwithstanding these general considerations, tax-sharing arrangements for payroll taxes actually exist in a few countries. A relatively small payroll tax is also levied by the states in Australia.

• Natural Resource Taxes

Taxes on natural resources are generally perceived as poor candidates for local taxation, since normally the base of these taxes is very unevenly distributed across jurisdictions. In addition, extraction of economic rent from natural resources could be held to be a national prerogative, which should benefit the whole of the nation and not just selected fortunate regions. The taxes in question are also in many cases characterized by a high level of revenue volatility owing to price fluctuations. The associated uncertainty, it could be argued, should be absorbed by the central government, which generally has a number of alternative revenue sources at its disposition, and not by regional or local governments, which are meant primarily to conduct allocative functions (price fluctuations on oil, for example, have created sharp swings in the revenues of states in Nigeria). These theoretical considerations, however, do not take into account the important fact that, in practice, cultural and ethnic differences may be the reason for strong pressures toward regional independence, including regional control over natural resources, as is seen, for example, in Russia.

Alternatively, it could be held that, at least in part, these taxes should be considered as benefit taxes, that is, as payments for the benefits deriving from the provision by local or regional governments of the necessary infrastructure investment without which either exploitation of the natural resources would not be possible, or the return to the investments required could be significantly reduced. In other cases, the taxes may be considered as compensation for the environmental costs associated with the exploitation of natural resources. This might also constitute part of the reason why a number of countries actually operate tax-sharing schemes for natural resource taxation (see country chapters for details). In Russia, local governments in regions rich in natural resources benefit from the retention of a high share of these taxes. Previously, in Nigeria, all taxes accruing from oil production went to the states. In Argentina, a revenue-sharing scheme is in place for royalties on mineral extraction.

• Import and Export Taxes

Import and export taxes, apart from being generally considered inferior to the taxes dealt with above, should always be imposed by the national government to reduce the possibility of introducing major distortions within the country through differential foreign trade taxes imposed by different jurisdictions. In fact, the large majority of countries assign import duties exclusively to the central government (Nigeria being one exception, with import tax revenue being shared). Nevertheless, in some countries, such as Russia, the formula for sharing important export tax receipts with regions from which the exports originate remains an important tax policy issue (because of the nature of the exports in question, these taxes may as well be considered special cases of taxes on natural resources). India operates a special tax on interstate sales with a maximum rate of 4 percent, and with a number of exemptions (see Chapter 21 for details).

• Benefit Taxes and User Charges

In addition to what has been said above about specific sources of taxation, it is generally held that benefit taxes, license fees, and user charges should all be used to the maximum extent feasible at the local level because they are transparent, they minimize the risk of tax exporting, they generally do not involve problems of vertical or horizontal equity, and they increase economic efficiency. Although these charges are significant sources of revenue for the localities, they are generally modest compared with some of the taxes considered above.

• Tax Assignment in Practice

A striking feature of the financing of subcentral levels of government is the significant variation in the level and composition of local government taxation across countries. This feature is illustrated in Tables 2 and 3 , which for a fairly limited sample of countries show the attribution of total tax revenues to subsectors of general government as percentage of total tax revenue, in federal as well as in unitary countries, and the composition of the tax revenue for each subcentral level of government with respect to different types of taxes (including revenues from the tax-sharing arrangements). These tables by their nature do not indicate the actual degree of state, provincial, or local autonomy over the tax revenues, which, as discussed this chapter, may vary considerably across countries.

Nevertheless, as the tables show, most countries have more than one subcentral tax (although the tables do not distinguish between cases where revenues are solely assigned to the subcentral level and where they are shared under tax-sharing arrangements), and this holds for industrial as well as for developing countries, and for federal as well as for unitary countries. Generally, the personal income tax seems (as expected) to be of greater importance for the subcentral level in industrial countries than in developing countries, although for example in most Anglophone countries the property tax is the dominant tax, especially at the local level (this holds in Australia, Canada, the United States, Ireland, New Zealand, and, until 1990, the United Kingdom).

In some, especially federal, countries, general consumption taxes and in some cases also excises play a considerable role, particularly at the state level (for example, in Austria, Brazil Canada, Germany, India, South Africa, Spain, and the United States). A predominant feature seems to be that these taxes are used by large countries with correspondingly large subcentral areas. Also, in some of these countries, consumption tax systems take the form of tax-sharing arrangements with little or no state or local discretion, as in the case of the Austrian and German VAT.

A common feature not shown in these tables is the dominant use of personal income taxes at the subcentral level as opposed to corporate income taxes, reflecting the fact that corporate income taxes are generally considered unsuitable at the subcentral level owing to the mobility of the tax base.

Although the property tax is among the most popular subcentral taxes, not least in federal industrial countries and unitary developing countries, its revenue measured as a percentage of GDP is generally modest and seldom exceeds about 3 percent. This is probably because it is a highly visible tax, it is hard to evade, there are problems associated with the valuation of property, and it is generally perceived as a regressive tax. For these reasons, the property tax has become increasingly unpopular politically, which may also help to explain why its importance as a revenue source has declined in many countries during the last decade or so.

• Concluding Remarks

The theory on fiscal federalism provides some fairly broad guidelines with regard to which taxes can appropriately be assigned to subnational levels of government and which should be kept at the central level. However, although some general patterns in accordance with these guidelines can be identified in country practices, even fairly homogeneous countries at the same level of development have in many cases chosen different solutions to these problems. One of the main reasons for this is that the historical, geographical, ethnic, and constitutional character of each country has profound implications for the range of feasible and efficient tax assignment policies.

Some lessons may nevertheless be drawn from actual country experiences. First is the importance of tax administration: a decentralized fiscal system cannot function satisfactorily without the necessary administrative capabilities at the subcentral level. In other words, the design of tax systems should clearly be adapted to the level and quality of administrative resources that have been found politically appropriate to devote to the subcentral levels of government. Generally, the more complicated the tax in question is made for other reasons (for example, for reasons of revenue or equity), the stronger the argument for placing the tax with a higher or the highest tier of government. As a reflection of this “rule,” more complex systems of taxation are generally assigned to subcentral levels of governments only in more developed countries.

Second, in addition to the crucial question of the choice of tax sources at subordinate levels of government, actual experience indicates that a decentralized system will work satisfactorily only if state, provincial, and local governments are given at least one major own source of revenue, that is, a source of revenue over which they have autonomy to determine the revenue (assuming that this system is supported by adequate equalization of tax capacities and expenditure needs). Only then can a multilevel system of government promote accountability and ultimately economic efficiency.

Finally, there are obvious potential gains as well as risks associated with decentralizing taxing powers. The gains include improved mobilization of revenue sources and the potential efficiency gains alluded to above. The risks take the form of leaving the central government in a more vulnerable position with respect to its ability to conduct effective fiscal policies, especially for stabilization purposes.

This assumes chat there are no substantial externalities associated with the provision of local services, that the tax cannot be shifted to other jurisdictions, and that an efficient equalization scheme is in place.

For general expositions of the principles of fiscal federalism, see Oates (1972) and King (1984) .

See in particular King (1984) , Musgrave and Musgrave (1980) , and Oates (1972) .

Unless the areas in question are large as is the case in, for example, Canada and the United States.

As illustrated in Tables 2 and 3 , the importance of different tax sources varies considerably across countries. Based on more comprehensive information than that presented here, there seems to be a broad tendency for income taxes at subordinate levels of government to increase in importance with increasing level of development, although there are some exceptions to this rule.

In some countries, such as Finland and Norway, the income tax threshold in the local tax is much lower than in the central government income tax.

However, schedular mechanisms such as withholding or minimum contributions may be widely used under a global system for ease of administration.

This particular feature may increase the revenue elasticity of the subcentral tax compared with a normal flat rate system to the extent that subcentral governments will share the gains of any bracket creep effects in the federal tax.

This disregards the problems posed by mail order systems, particularly with regard to the control and setting of tax rates (in the United States, some of these problems have been addressed by applying the rates of the destination states to mail order sales). Although based on a fairly limited sample of countries, Table 3 seems to indicate that the degree of development is also important in this regard, in that there is a tendency for sales taxes to be of larger revenue importance for local governments in developing than in developed countries.

Which means that the tax is levied by the jurisdiction in which consumption takes place, independent of the origin of the goods (that is, expotts are exempt and imports are liable to tax), as opposed to the origin principle, according to which the VAT is levied by the jurisdiction in which production takes place, that is, interstate exports are taxed and imports are not.

In China and Russia, ail import VAT accrues to the federal government, and only domestic VAT revenues are shared with the regions.

Formally, the 25 percent local rate is a maximum, but the large majority of regions are believed to apply the maximum rate.

In the majority of countries, provision of regional or local government services is related to the residency of individuals.

Bird , Richard M. , 1993 , “Tax Reform in India,” Economic and Political Weekly , Vol. 28 ( December 11 ), pp. 2721 – 26 .

• Search Google Scholar
• Export Citation

King , David N. , 1984 , Fiscal Tiers: The Economics of Multi-Level Government ( London : Allen & Unwin ).

King , David N. , 1992 , ed. , Local Government Economics in Theory and Practice ( London : Routledge ).

McLure , Charles E. , Jr. , 1977 , “The ‘New View’ of the Property Tax: A Caveat,” National Tax Journal , Vol. 30 , No. 1 , pp. 69 – 75 .

Musgrave , Robert A. , and Peggy B. Musgrave , 1980 , Public Finance in Theory and Practice ( New York : McGraw-Hill ).

Oates , Wallace E. , 1972 , Fiscal Federalism ( New York : Harcourt Brace Jovanovich ).

Tanzi , Vito , 1996 , “Fiscal Federalism and Decentralization: A Review of Some Efficiency and Macroeconomic Aspects,” in Annual World Bank Conference on Development Economics, 1995 ( Washington : World Bank ).

Within Same Series

• 4 Tax Reform in Russia
• PART I Theory
• 6 Recent Tax Policy Trends and Issues in Latin America
• VII: Tax Reform and IMF Tax Policy Advice
• Chapter 2. Modernizing the Tax Policy Regime
• PART III Practice: Developing Countries
• PART IV Practice: Economies in Transition
• Chapter 3. Strengthening Tax Administration
• IV: Income and Wealth Taxes
• PART II Practice: Industrial Countries

Other IMF Content

• Revenue Assignments—Tax Policy and Administration
• 11 Basic Issues of Decentralization and Tax Assignment
• Rethinking Subnational Taxes: A New Look At Tax Assignment
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• 8 The Assignment of Oil Tax Revenue
• 12 Local Taxation in an International Perspective
• Tax Policy Options for a United Germany
• Technical Assistanceon Tax Policy: A Review
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• Tax Expenditure Estimation Tool Kit
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• Quo Vadis Income Tax?: Towards the PIT-CA
• Economic Integration and the Transformation of the Tax Mix: Cyprus 1990-2001
• Brazil's ICMS Tax: Origin, Changes, Current Situation, and Paths to Recovery
• Trade Liberalization and Trade Taxes
• Party System Institutionalization and Reliance on Personal Income Tax in Developing Countries
• A Basic Framework for Evaluating Value Added Tax Expenditures

The World Bank

• Determinants of Property Tax Revenue: Lessons from Empirical Analysis
• Exploring Reform Options in Functional Assignment
• Ghana Tax Gap Analysis
• The Entry of Randomized Assignment into the Social Sciences
• A Handbook for Tax Simplification
• Not(ch) Your Average Tax System: Corporate Taxation under Weak Enforcement
• Guinea - Opportunities for Enhanced Domestic Revenue Mobilization: Value-Added Tax and Excise Taxes
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Table of Contents

• Front Matter
• 1 Intergovernmental Fiscal Relations in a Macroeconomic Perspective: An Overview
• 2 Assigning Expenditure Responsibilities
• 3 Tax Assignment
• 4 Intergovernmental Transfers
• 6 Budgetary and Financial Management
• 7 Control of Subnational Government Borrowing
• 8 Australia
• 13 Switzerland
• 14 United Kingdom
• 15 United States
• 16 Argentina
• 19 Colombia
• 20 Ethiopia
• 25 Bulgaria
• 28 Russian Federation

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Pengertian Tax Planning dan Skemanya dalam Bisnis

Tax planning atau perencanaan pajak adalah proses menganalisis rencana keuangan atau situasi dari perspektif pajak.

Tujuan dari tax planning adalah untuk memastikan adanya efisiensi pajak. Dengan bantuan perencanaan pajak, seseorang dapat memastikan bahwa semua elemen dari rencana keuangan dapat berfungsi bersama dengan efisiensi pajak yang maksimal.

Perencanaan pajak adalah komponen penting dari rencana keuangan. Mengurangi kewajiban pajak dan meningkatkan kemampuan untuk memberikan kontribusi terhadap rencana pensiun sangat penting untuk keberhasilan.

Tax planning sendiri terdiri dari berbagai pertimbangan. Pertimbangan seperti ukuran, waktu pendapatan, waktu pembelian, dan perencanaan berkaitan dengan jenis pengeluaran lainnya.

Lebih jauh, pada artikel ini kita akan membahas apa itu tax planning secara lebih mendalam dan caranya yang bisa Anda gunakan dalam bisnis.

Apa itu Tax Planning?

Menurut Erly Suandy (2017) perencanaan pajak adalah langkah awal dalam manajemen pajak. Pada tahap ini dilakukan pengumpulan dan penelitian terhadap peraturan perpajakan agar dapat diseleksi jenis tindakan penghematan pajak yang akan dilakukan.

Pada umumnya penekanan perencanaan pajak (tax planning) adalah untuk meminimumkan kewajiban pajak

Motivasi yang mendasari dilakukannya perencanaan pajak Erly Suandy (2017)   yaitu :

• Kebijakan Perpajakan
• Undang – Undang Perpajakan
• Administrasi Perpajakan

Perencanaan pajak memainkan peran penting dalam kisah pertumbuhan keuangan setiap individu dan bisnis karena pembayaran pajak adalah wajib bagi semua wajib pajak.

Dengan perencanaan pajak, seseorang akan dapat merampingkan pembayaran pajaknya sehingga ia akan menerima pengembalian yang cukup besar selama periode waktu tertentu yang melibatkan risiko minimum.

Selain itu, perencanaan pajak yang efektif akan membantu mengurangi kewajiban pajak seseorang.

Perencanaan pajak dapat diklasifikasikan sebagai berikut:

• Perencanaan pajak permisif: Perencanaan pajak yang berada di bawah kerangka hukum.
• Perencanaan pajak yang bertujuan: Perencanaan pajak dengan tujuan tertentu.
• Perencanaan pajak jangka panjang/jangka pendek: Perencanaan yang dilakukan di awal dan menjelang akhir tahun fiskal.

Baca juga: Apa itu FOB? Ketahui Jenis, Contoh, dan Keuntungannya Di Sini!

Jenis tax planning

National tax planning.

Perencanaan ini pada yang praktiknya berpedoman pada Undang-Undang domestik. Perencanaan pajak jenis ini biasanya dilakukan oleh Wajib Pajak badan yang hanya memiliki usaha di Indonesia saja atau melakukan transaksi dengan Wajib Pajak dalam negeri saja

International tax planning

Biasanya dilakukan oleh Wajib Pajak badan yang memiliki kegiatan usaha di dalam negeri dan di luar negeri.

Perencanaan pajak ini dilakukan jika Wajib Pajak melakukan transaksi tak hanya dengan Wajib Pajak dalam negeri, tetapi juga dengan Wajib Pajak di luar negeri.

Berbeda dengan National Tax Planning, International Tax Planning harus turut memperhatikan Undang-Undang atau perjanjian pajak (Tax Treaty) dari negara-negara yang ikut terlibat.

Baca juga: Pengertian Bank Overdraft dan Pencatatannya dalam Akuntansi

Syarat dalam Melakukan Tax Planning

Untuk melakukan perencanaan pajak dengan benar dan sah, ada beberapa syarat yang harus dipenuhi. Berikut adalah beberapa syarat penting dalam melakukan tax planning di Indonesia:

Pemahaman mengenai peraturan perpajakan

Syarat utama dalam perencanaan pajak adalah memahami secara mendalam peraturan perpajakan yang berlaku di Indonesia.

Seorang konsultan pajak atau individu yang melakukan perencanaan pajak harus memiliki pengetahuan yang baik tentang undang-undang, peraturan, dan kebijakan pajak yang berlaku untuk dapat melakukan perencanaan pajak dengan benar.

Kesesuaian dengan undang-undang

Setiap tindakan dalam perencanaan yang dilakukan harus sesuai dengan undang-undang perpajakan yang berlaku. Tidak boleh ada manipulasi atau pelanggaran hukum dalam usaha mengurangi kewajiban pajak.

Tidak melibatkan tax evasion

Tax planning harus berbeda dengan tax evasion . Tindakan untuk menghindari pembayaran pajak dengan cara-cara ilegal atau menyembunyikan pendapatan atau aset dari otoritas pajak adalah tindakan yang melanggar hukum dan etika bisnis.

Baca juga: Mengenal Jenis Tarif Pajak yang Berlaku di Indonesia

Keterbukaan dan kepatuhan

Semua informasi dan dokumen yang diperlukan oleh otoritas pajak harus disediakan dengan jujur dan tepat waktu. Kepatuhan terhadap kewajiban perpajakan adalah syarat penting dalam tax planning yang sah.

Profesionalisme dan etika

Dalam melakukan perencanaan pajak, seorang konsultan pajak harus menjalankan tugasnya dengan profesionalisme dan etika yang tinggi. Keputusan dan saran yang diberikan harus didasarkan pada pertimbangan objektif dan kepentingan terbaik klien.

Pengawasan dan transparansi

Perencanaan juga harus dilakukan secara terbuka dan transparan, dengan melibatkan klien dalam seluruh proses perencanaan. Klien harus diberikan informasi yang jelas mengenai tujuan, manfaat, dan risiko dari strategi perencanaan pajak yang direkomendasikan.

Baca juga: Pengertian Manajemen Pajak, Manfaat, dan Tips Melakukannya

Tahapan dalam Melakukan Tax Planning

Tahap melakukan tax planning melibatkan proses perencanaan yang terstruktur dan sistematis. Berikut adalah tahapan umum dalam melakukan tax planning:

Pengumpulan informasi

Tahap awal dalam perencanaan pajak adalah pengumpulan informasi secara komprehensif mengenai situasi keuangan, transaksi, dan aktivitas bisnis klien. Ini termasuk data mengenai pendapatan, biaya, investasi, aset, dan kewajiban pajak yang sudah ada.

Analisis keuangan

Setelah informasi terkumpul, konsultan pajak akan melakukan analisis mendalam terhadap data tersebut untuk memahami profil keuangan bisnis dan mengidentifikasi potensi peluang dan tantangan dalam perencanaan pajak.

Untuk memudahkan Anda dalam melakukan analisis data keuangan dalam bisnis, usahakan untuk menghindari proses pencatatan manual yang rentan kesalahan dan bias informasi.

Sebagai solusi, pemilik bisnis bisa menggunakan software akuntansi online seperti Kledo yang memiliki fitur laporan keuangan dan pajak yang lengkap dan mudah digunakan.

Anda bisa mencoba menggunakan software akuntansi Kledo secara gratis selama 14 hari melalui tautan pada gambar di bawah ini:

Penetapan tujuan

Tahap ini melibatkan penentuan tujuan tax planning berdasarkan kebutuhan dan keinginan klien. Tujuan perencanaan pajak bisa beragam, seperti mengurangi beban pajak, memanfaatkan insentif pajak, atau mengoptimalkan struktur bisnis.

Lebih jauh, ini berhubungan dengan skema tax planning yang akan kita bahas secara mendalam di bawah.

Baca juga: Pajak Restoran: Aturan, Nilai, dan Cara Lapornya

Identifikasi strategi

Berdasarkan analisis dan tujuan yang telah ditetapkan, konsultan pajak akan mengidentifikasi strategi dan metode perencanaan pajak yang sesuai dengan kebutuhan klien.

Strategi ini dapat mencakup penggunaan insentif pajak, deduksi pajak, atau pengalihan kepemilikan aset.

Simulasi dan evaluasi

Selanjutnya, konsultan pajak akan melakukan simulasi dan evaluasi dari strategi yang diusulkan. Simulasi ini bertujuan untuk melihat dampak potensial dari perencanaan pajak yang direkomendasikan terhadap kewajiban pajak klien.

Implementasi

Setelah strategi perencanaan pajak disetujui oleh klien, tahap implementasi akan dilakukan. Ini melibatkan penerapan langkah-langkah perencanaan pajak yang telah direncanakan, termasuk pengaturan administratif dan transaksi yang relevan.

Pemantauan dan penyesuaian

Proses tax planning tidak berhenti setelah diimplementasikan. Konsultan pajak akan terus memantau perkembangan situasi keuangan dan perubahan peraturan perpajakan yang mungkin mempengaruhi strategi yang telah diterapkan.

Jika diperlukan, penyesuaian atau perubahan bisa dilakukan untuk tetap sesuai dengan peraturan yang berlaku.

Dokumentasi

Penting untuk menyimpan dokumentasi yang komprehensif mengenai strategi dan tindakan yang diambil dalam perencanaan pajak.

Dokumentasi ini akan berfungsi sebagai bukti kepatuhan dan referensi di masa mendatang.

Baca juga: Pengertian Pajak Degresif, Jenis, dan Bedanya dengan Pajak Progresif

Apa Saja Skema Tax Planning?

Di Indonesia, terdapat beberapa skema tax planning yang sah dan dapat digunakan untuk mengoptimalkan kewajiban pajak. Beberapa di antaranya meliputi:

1. Tax avoidance

Tax avoidance dalam perencanaan pajak mengacu pada upaya untuk menghindari atau mengurangi kewajiban pajak dengan cara yang sah dan legal. Tax avoidance berfokus pada pemanfaatan celah-celah dalam peraturan perpajakan guna meminimalkan beban pajak tanpa melanggar hukum.

Perbedaan antara t ax avoidance dan tax evasion adalah pada legalitas tindakan tersebut. Tax avoidance adalah legal dan diperbolehkan oleh hukum perpajakan, sementara tax evasion adalah tindakan ilegal yang melibatkan manipulasi atau penyembunyian informasi keuangan untuk menghindari pembayaran pajak yang seharusnya dibayar.

Contoh tax avoidance dalam perencanaan pajak termasuk penggunaan berbagai jenis insentif pajak yang disediakan oleh pemerintah, pengalihan kepemilikan aset dengan mengandalkan hukum perpajakan yang menguntungkan, dan pemanfaatan struktur bisnis yang memanfaatkan tarif pajak yang lebih rendah.

Contoh nyatanya adalah perusahaan mengubah tunjangan karyawan dalam bentuk uang menjadi natura karena natura bukan objek pajak PPh21.

Namun, perlu diingat bahwa sementara tax avoidance adalah legal, pendekatannya harus dipertimbangkan dengan hati-hati dan etika bisnis yang baik.

Beberapa praktik tax avoidance bisa mendapat perhatian lebih dari otoritas pajak dan masyarakat karena dapat menyebabkan potensi kehilangan pendapatan bagi negara atau ketidakadilan dalam sistem perpajakan.

Jika Anda menggunakan konsultan pajak profesional, penting untuk mendapatkan nasihat yang bijaksana dan memastikan bahwa tax planning yang direkomendasikan sesuai dengan peraturan perpajakan yang berlaku dan tidak melibatkan praktik yang meragukan dari sudut pandang etika dan hukum.

Baca juga: Kenali Berbagai Insentif Pajak Berikut Ini

2. Tax saving

Tujuan dari tax saving adalah untuk memanfaatkan berbagai insentif dan kebijakan perpajakan yang ada guna mengurangi beban pajak secara legal.

Tax Saving mencakup strategi dan keputusan finansial yang dapat membantu individu atau perusahaan mengurangi jumlah penghasilan kena pajak atau memanfaatkan berbagai keringanan atau pengurangan pajak yang diberikan oleh pemerintah.

Beberapa contoh tax saving termasuk:

Penggunaan deduksi pajak

Memanfaatkan berbagai jenis deduksi pajak yang diizinkan oleh undang-undang, seperti deduksi untuk biaya pendidikan, asuransi kesehatan, atau donasi amal.

Investasi dalam knstrumen Keuangan yang mendapat insentif pajak

Menanamkan dana dalam instrumen investasi yang diberikan keringanan pajak, seperti obligasi pemerintah atau reksa dana dengan perlakuan khusus dalam perpajakan.

Memanfaatkan insentif pajak untuk bisnis

Bagi perusahaan, tax saving bisa mencakup pemanfaatan insentif pajak untuk sektor atau jenis usaha tertentu, seperti pengurangan tarif pajak untuk industri tertentu atau adanya amnesti pajak.

Penggunaan struktur bisnis yang tepat

Memilih struktur bisnis yang dapat memberikan keuntungan dari segi perpajakan, seperti memilih antara PT, CV, atau usaha perorangan.

Penting untuk diingat bahwa tax saving harus dilakukan secara legal dan sesuai dengan ketentuan perpajakan yang berlaku. Tax saving bukan berarti menghindari kewajiban pajak atau melibatkan praktik yang meragukan.

3. Mengoptimalkan kredit pajak

Kebanyakan wajib pajak badan kurang mengetahui bahwa mereka dapat mengkreditkan pajak yang sudah dipotong asalkan tidak menyimpang dari peraturan.

Misalnya, Pajak Penghasilan (PPh) 22 atas pembelian solar dan/atau impor, PPh 23 atas penghasilan jasa atau sewa, serta pajak fiskal luar negeri atas perjalanan dinas pegawai.

Baca juga: Perbedaan CV dan PT, Kepanjangan, dan Syarat Pendiriannya

4. Melakukan penundaan dalam membayar kewajiban pajak

Perusahaan sebagai wajib pajak dapat menunda pembayaran Pajak Pertambahan Nilai (PPn) dengan menunda penerbitan faktur pajak keluaran hingga batas waktu yang diperkenankan, khususnya untuk penjualan kredit.

PPN dapat dibayar pada akhir bulan berikutnya setelah bulan penyerahan barang.

5. Menghindari pelanggaran atas peraturan Pajak

Wajib pajak badan harus menguasai peraturan pajak yang berlaku agar terhindar dari timbulnya sanksi perpajakan berupa sanksi administrasi, seperti denda, bunga, atau kenaikan, hingga sanksi pidana.

Baca juga: Bagaimana Cara Mendapatkan EFIN Pajak Online?

Melakukan tax planning atau perencanaan pajak sangat penting untuk memastikan bahwa pajak yang Anda bayarkan sudah sesuai dengan aturan yang berlaku namun dengan nilai yang efisien dan cara yang legar.

Melakukan konsultasi pajak pada konsultan pajak adalah pilihan terbaik bagi Anda yang tidak memiliki sumber daya atau pengetahuan pajak secara mendalam.

Pastikan juga Anda menggunakan software akuntansi seperti Kledo untuk pencatatan seluruh transaksi yang terjadi dalam bisnis dan memudahkan Anda dalam melakukan tax planning.

Tertarik? Anda bisa mencoba menggunakan Kledo secara gratis selama 14 hari atau selamanya melalui tautan ini.

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Expenditure and Revenue Assignment: Principles

• First Online: 06 September 2019

Cite this chapter

• Harry Kitchen 4 ,
• Melville McMillan 5 &
• Anwar Shah 6  

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This chapter provides a conceptual overview of the principles of expenditure and revenue assignment to local governments. Local government is seen to be more aware of local preferences and conditions and more accountable to local residents than senior governments. Core and noncore responsibilities are distinguished (e.g., local streets versus schooling). Financing follows function. Financing follows the benefit criterion; that is, local residents pay for the local services from which they benefit—with user charges and local taxes although grants may be needed. Various (especially) noncore services involve interjurisdictional spillovers and/or redistributive considerations and so, if assigned to local governments require intergovernmental transfers to achieve efficiency and equity objectives. Financing alternatives and appropriate uses are reviewed.

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The vast number of references found in Bahl and Bird ( 2018 ) and Boadway and Shah ( 2009 ), two books providing comprehensive examinations of fiscal federalism and decentralization, illustrate the growth and extent of the literature. Earlier valuable contributions include those by Bahl and Linn ( 1992 ), Bird et al. ( 1995 ), Litvack et al. ( 1998 ), Manor ( 1999 ), McLure ( 1983 , 1999 ), OECD ( 1987 , 1997 , 1999 ), Owens and Norregaard ( 1991 ), Shah ( 1991 , 1994 ), and Ter-Minassian ( 1997 ).

A resulting additional argument for decentralization is that it enhances political participation. Greater responsiveness, accountability, and enhanced participation have long been seen as advantages of decentralization in the political literature. Other widely noted potential positive features of local government are greater transparency of government to local residents and, of course, greater autonomy. Shah ( 2014 ) advocates for movements toward FAIR (fair, accountable, incorruptible, and responsive) local governance and outlines a framework for evaluation. Blending these desirable characteristics with the economics of fiscal federalism has created a powerful case for decentralization and a more valuable tool for the analysis of decentralized government.

Besley and Coate ( 2003 ) have extended the theory underlying the conventional arguments for decentralization. Their more general model assumes cost sharing of centrally provided outputs under a nationally uniform tax system, allows for non-uniform central provision across localities, locally elected representation to the central government, cooperative and non-cooperative legislative decision-making, varying degrees of heterogeneity in local tastes, and varying interjurisdictional spillovers. Heterogeneity of tastes and the degree of spillovers are central to the centralization-decentralization choice with less heterogeneity and more spillover favoring centralization. However, the case for decentralization is surprisingly strong and prevails even when tastes are uniform and spillovers significant. Also see Ingram and Hong ( 2008 , 17–108).

Critical assessments of fiscal federalism and, particularly, decentralization have emerged—motivated in part by difficulties experienced within some countries. Oates ( 2005 ) characterized those as an emerging second-generation of fiscal federalism. He categorized the second-generation literature (notably in Oates 2008 ) as having two strands. The first strand applies a broader range of economic modeling (i.e., beyond the more conventional public finance) to the questions of fiscal federalism while the second strand evolved from public choice with a focus on political institutions. Both address problems with decentralization that have or might occur. A dominant concern is the problems that emerge with soft (rather than hard) budget constraints on decentralized governments. Essentially, the second-generation literature focuses on problems that can arise when there are flaws in the decentralization design. Surveys of the impacts of decentralization generate mixed results but do point to the importance of good design and implementation (e.g., see Bahl and Bird 2018 , Chapter 2). Also, there is some evidence that better-quality government enhances personal well-being (Helliwell and Huang 2008 ; Helliwell et al. 2018 ) and, though somewhat mixed and deserving of more detailed analysis, that decentralization can also increase well-being/life satisfaction (e.g., Bjornskov et al. 2008 ; Diaz-Serrano and Rodriguez-Pose 2012 ; Gao et al. 2014 ; Tomaney et al. 2011 ). Closely related is a literature on measuring the decentralization of government (e.g., Ivanyna and Shah 2014 ; Hooghe et al. 2010 , 2016 ; Hooghe and Marks 2016 ). The OECD provides valuable recent overviews of fiscal federalism and decentralization (e.g., OECD 2013 , 2016 , 2018 ).

It is important to recognize that borrowing is not a substitute for adequate funding. Debt must be repaid and debt-servicing costs met from the borrowing government’s revenues. Borrowing only facilitates financing long-term capital investments, particularly when they are large and irregular.

For example, see Wiesner ( 2003 ) for a discussion of the role of market-based decentralization in Latin America and Dollery and Wallis ( 2001 ) for a more general discussion of competition in the delivery of public services. Oates ( 1999 ) includes a discussion of market-preserving federalism.

See Tresch ( 2015 , Chapters 26 and 27) for a discussion of a redistributional role for local government.

For further discussion of the topics addressed in this section, see, for example, Dollery and Wallis ( 2001 , Ch 2), Fisher ( 1996 , Ch 6), and Oates ( 1972 ).

See a public finance text (e.g., Fisher 1996 ) for details of the ideal allocation of the cost of public goods. The basic idea is that each individual is charged a personal marginal cost equal to that person’s marginal benefit and the ideal level of output exists when, in the case of a pure public good, the sum of all individual marginal benefits equals the marginal cost of the output.

The problem of distinguishing between economics of sharing and economies of scale is that it is often difficult to distinguish between units of output when many individuals benefit from the same unit of output. For example, there could be economies of scale in the operation of an air pollution abatement system (e.g., cost per unit of particulate matter removed decline to some point) but the benefits of the improvement in air quality resulting from some additional abatement (change in output) could be enjoyed by many or few people (economies of sharing).

For insight into and a brief review of empirical economies of scale analyses, see Byrnes and Dollery ( 2002 ).

For discussion and empirical insights, see McMillan et al. ( 1981 ) and McMillan ( 1989 ).

For illustrations of the assignment of responsibilities among multi-tiered governments, see Table 4.1 of Chap. 4 and Shah ( 2006 , Chapter 1).

Even when services are purely local, citizens may prefer having an upper-level government to review certain activities (e.g., water quality, sewerage treatment, refuse disposal) to provide an informed and independent assessment of performance and especially of the less observable aspects.

See Dahlby ( 2001 ) for a “consensus view” of tax assignments. The shift of the payroll tax to the upper tier(s) of government has been prompted as well by its widespread utilization by senior governments to finance earmarked social benefit programs such as unemployment insurance and social security/pensions.

This treatment reflects the usual top-down perspective on tax assignment in that the matter is decided at the center. In some cases, however, tax assignment is a bottom-up decision where federating states decide upon what tax powers the new central authority should have. See Dahlby ( 2001 ).

In the interests of maintaining the advantages of an internal common market (i.e., free trade within the country) the only taxes, if any, on cross-border movements of goods and services should be national levies on foreign trade.

Bird ( 1999 ) argues that the international adoption of national value-added taxes and their revenue importance have contributed to this centralization.

A broader discussion of transfers—beyond the gap-closing role—appears in the latter part of this chapter.

Dahlby ( 2001 ) notes several problems with the “consensus” view. Those are (a) the need to link expenditure and tax decisions, (b) a need to consider expenditure assignment and grant systems, (c) neglect of distributional impacts of subnational government policies, (d) overlooking certain problems of joint occupancy of tax fields, (e) ignoring that some economic shocks calling for stabilization are region specific, and (f) putting little emphasis on administration and compliance costs of alternative tax assignment regimes.

It is important to remember that property taxes, and especially those taxing improvements as well as land, also may not match benefits exactly and, like a local personal income tax, involve some redistribution. On the other hand, a local personalincome tax may match better benefits and costs for a local service such as schooling.

Kitchen and Slack ( 1993 ) found that about 40 percent of municipal government (i.e., nonschooling) expenditure benefited nonresidential property.

Also see Bahl and Bird ( 2018 , pp. 208–211).

When prices for the services of local government enterprises are above the levels consistent with user charges (e.g., utility charges exceed full costs), the difference is effectively a special sales tax on those services.

For those reasons, Bird ( 1999 ) has recommended a more uniform local business value-added tax.

Besides the references cited below, the following provide valuable insights into intergovernmental transfers: Bird ( 2000 ), Bird and Smart ( 2002 ), Ebel and Yilmaz ( 2001 ), Martinez-Vazquez and Searle ( 2007 ), Shah ( 1999 , 2004 ), and Shah and Thompson ( 2004 ).

At the local government level, however, fiscal disadvantages may be offset in part through capitalization into property values.

Bird ( 1993 ) offers an additional rationale for conditional matching grants. Conditional matching funding can induce local governments to spend some of their own funds on the grantor’s priorities (e.g., achieving minimum standards or greater uniformity of local services) thus stretching the grantor’s budget. While a legitimate perspective, the basis for the mutual interest is in some shared or spillover benefits. Gramlich ( 1977 ) classifies conditional transfers aimed at such grantor policy objectives as also blending the advantages of centralized finance and decentralized supply as having a political-institutional justification. However, because those grants have an efficiency basis, they are distinguished here from the politically motivated grants below.

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Harry Kitchen

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Kitchen, H., McMillan, M., Shah, A. (2019). Expenditure and Revenue Assignment: Principles. In: Local Public Finance and Economics. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-21986-4_2

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• DATA CENTER PERATURAN TAX TREATY PUTUSAN KURS KMK KURS BI TARIF BUNGA
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Pelaksanaan Tugas Dan Fungsi Seksi Ekstensifikasi Dan Penyuluhan

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PERATURAN DIREKTUR JENDERAL PAJAK NOMOR PER - 21/PJ/2015 TENTANG PELAKSANAAN TUGAS DAN FUNGSI SEKSI EKSTENSIFIKASI DAN PENYULUHAN DIREKTUR JENDERAL PAJAK,

• Peraturan Menteri Keuangan Nomor 206.2/PMK.01/2014 tentang Organisasi dan Tata Kerja Instansi Vertikal Direktorat Jenderal Pajak;
• Peraturan Direktur Jenderal Pajak Nomor PER-15/PJ/2015 tentang Pedoman Penerapan Peraturan Menteri Keuangan Nomor 206.2/PMK.01/2014 tentang Organisasi dan Tata Kerja Instansi Vertikal Direktorat Jenderal Pajak;

MEMUTUSKAN :

• Ekstensifikasi adalah upaya proaktif yang dilakukan oleh Direktorat Jenderal Pajak dalam rangka pemberian Nomor Pokok Wajib Pajak (NPWP) dan/atau pengukuhan Pengusaha Kena Pajak (PKP).
• Pengawasan Wajib Pajak Baru adalah upaya aktif yang dilakukan oleh Direktorat Jenderal Pajak untuk mengawasi penghitungan, pembayaran atau penyetoran, dan pelaporan kewajiban perpajakan Wajib Pajak baru.
• Penyuluhan Perpajakan adalah suatu upaya dan proses memberikan informasi perpajakan kepada masyarakat, dunia usaha, dan lembaga pemerintah maupun non-pemerintah.
• Penatausahaan Pajak Bumi dan Bangunan Sektor Perkebunan, Perhutanan, Pertambangan, dan Sektor Lainnya yang selanjutnya disebut Penatausahaan PBB P3 adalah rangkaian kegiatan yang meliputi pendaftaran dan pengadministrasian objek pajak, penilaian, perhitungan Nilai Jual Objek Pajak, penetapan, dan penagihan.
• Assignment adalah penugasan pengawasan Wajib Pajak secara sistem sebagaimana diatur dalam Peraturan Direktur Jenderal Pajak Nomor PER-15/PJ/2015 tentang Pedoman Penerapan Peraturan Menteri Keuangan Nomor 206.2/PMK.01/2014 tentang Organisasi dan Tata Kerja Instansi Vertikal Direktorat Jenderal Pajak.
• Pelaksanaan Ekstensifikasi;
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• Pelaksanaan Penyuluhan Perpajakan;
• Penatausahaan PBB P3; dan
• Pengawasan kewajiban perpajakan tertentu.
• Pengawasan kewajiban pelaporan;
• Pengawasan kewajiban pembayaran atau penyetoran;
• Permintaan penjelasan atas data dan/atau keterangan;
• Validasi data;
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• Penyusunan analisis risiko dalam rangka usulan pemeriksaan;
• Penerusan Informasi, Data, Laporan, dan Pengaduan (IDLP) hasil pengawasan; dan
• Penerbitan Nota Penghitungan surat ketetapan pajak (SKP) atas data konkret,

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Organisasi Dan Tata Kerja Instansi Vertikal Direktorat Jenderal Pajak

Peraturan Dirjen Pajak Nomor : PER - 15/PJ/2015

Pedoman Penerapan Peraturan Menteri Keuangan Nomor 206.2/PMK.01/2014 Tentang Organisasi Dan Tata Kerja Instansi Vertikal Direktorat Jenderal Pajak

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• FOREIGN INCOME & TAXPAYERS

Tax Planning Insights for Foreign Work Assignments

• International Tax
• Individual Income Taxation

In today's global economy, U.S. employers are sending workers abroad in increasing numbers. These workers commonly are referred to as expatriates or assignees. It is a trend that helps spread technical expertise throughout an organization, while simultaneously inspiring creativity and innovation. With proper planning, the transition abroad can be beneficial to both the employer and the assignee. Without proper planning, it can be a disaster. Though not a complete road map, the following is a basic overview of what one would want to know when advising clients prior to foreign work assignments.

An understanding of how expatriates, or expats, are taxed is necessary before one can properly plan for an assignment abroad. In short, U.S. citizens are taxed on their worldwide income by the United States, regardless of their residency or the income's source. This means that a U.S. employee's income could potentially be subject to double taxation, in both foreign and U.S. jurisdictions. It seems a bit unfair, right? Well, fortunately, the U.S. government is not completely heartless. Relief is available in many cases. For foreign earned income, an expat can claim either a Sec. 901 foreign tax credit, an itemized deduction for foreign taxes paid, or a Sec. 911 exclusion.

Foreign Earned Income Exclusion

A U.S. taxpayer may exclude up to $100,800 of foreign earned income in 2015 (adjusted for inflation annually) as well as a housing allowance if he or she maintains a tax home in a foreign country and qualifies via either (1) a bona fide residencetest or (2) a foreign physical presencetest (Secs. 911(a) and (b)(2)). 

• Bona fide residence test: A taxpayer who is a citizen of the United States satisfies this test if the taxpayer establishes to the IRS's satisfaction that he or she was a bona fide resident of a foreign country for an uninterrupted period that includes an entire tax year. Temporary visits to the United States or elsewhere for vacation or business do not necessarily prevent a taxpayer from establishing a bona fide foreign residence for a continuous period. The expat cannot qualify under this test if he or she submits a statement to the foreign country stating that he or she is not a resident of that country and is held by that country to not be subject to income tax in that country (Secs. 911(d)(5)(A) and (B)).
• Foreign physical presence test: A taxpayer that is a citizen or resident of the United States meets this test if he or she is present in one or more foreign countries (not the United States) during at least 330 "full" days in any given 12-month period (Sec. 911(d)(1)). These days need not be consecutive, which allows for potential partial exclusions when assignments begin in the middle of the calendar year. Also, notice that not all time needs to be spent in the country in which the taxpayer is claiming to have a tax home and not all time needs to be spent doing business. Personal and vacation time count. This test does not require that the taxpayer's income be subject to foreign income tax. Good records substantiating time spent outside the United States are a necessity, however.

If claiming the exclusion, the taxpayer will need to file Form 2555, Foreign Earned Income . U.S. citizens living abroad are allowed an automatic two-month extension until June 15 to file their individual tax returns. This extra time may be needed to properly substantiate certain claims for relief mentioned above. If needed, a U.S. citizen living abroad may apply for an additional extension.

Foreign Tax Credit

U.S. citizens are entitled to a foreign tax credit for income taxes paid or accrued to a foreign country. Though it sounds simple enough, this calculation can be complex in certain situations. Sec. 904 limits the credit by the amount of U.S. tax that is levied on the same amount of income. Sec. 901(j) can cause the credit to be denied entirely if the income earned is from a country whose government the United States (1) does not formally recognize; (2) has severed diplomatic relations with; (3) has not severed diplomatic relations with but with which it does not conduct relations; or (4) has designated as repeatedly supporting acts of international terrorism. Any excess foreign taxes not credited in the current year can be carried back one year and forward 10 years (or just forward 10, if elected) per Sec. 904(c).

Previously, if these tax credit amounts were unused, they could be converted into a deduction in the 10th year. The IRS recently changed its position regarding the 10th-year deduction, so CPAs can no longer rely on the safety net of converting a credit to a deduction in the final year (see Ward, "Foreign Tax Credit: When Is It Too Late to Change Your Mind?" 46 The Tax Adviser 662 (September 2015), where the author writes, "As evidenced by the recent reliance on this position in CCA 201330031 and CCA 201517005, it appears the IRS is holding firm in denying the 10-year period of limitation to taxpayers amending to change elections to claim credits for foreign taxes to elections to claim deductions."). Basically, if a taxpayer can reasonably predict that the expat will be in an excess credit position, the deduction might be the better way to go from the beginning. Foreign tax deductions can still be turned into foreign tax credits, but not the other way around.

It is also worth mentioning that U.S. individuals cannot claim a foreign tax credit for otherwise creditable foreign taxes attributable to income that they elect to exclude from gross income as foreign earned income (Sec. 911(d)(6)). In other words, a taxpayer can get either the exclusion or the credit, but not both. In practice, both are often calculated to see which provides the higher tax benefit for the particular situation.

It sounds simple enough, but it is hardly ever that simple.

A number of things might occur. One aspect that often is not considered is how the taxpayer's home state treats his or her assignment abroad. Practitioners should determine to what extent the relevant state law considers a taxpayer stationed abroad to still be a state resident and subject to state income tax. Most states do not follow federal law in terms of double-taxation relief, i.e., foreign tax credit or exclusion. The state might offer some sort of relief, however, but sometimes it is not much. For example, an Oregon resident is allowed to take a foreign tax deduction up to $3,000, but it phases out at higher income levels. On the other hand, Oregon nonresidents may exclude the foreign earned income.

Depending on the company policy (discussed later), sometimes the employer or the foreign company "gross-up" payments and pay the foreign tax on the expat's behalf. These gross-ups are income to the employee, which can increase the amount of taxes owed in the United States and the home state, making any withholding on the U.S. side insufficient, ultimately causing the employee to fork over some extra cash unexpectedly at the filing deadline. Remember that the entire tax liability is due at the original filing deadline for the return, April 15, not the extended date of June 15. In addition to taxes paid on the assignee's behalf, other items must be considered as well. Compensation packages for foreign assignments often have many additional allowances or income items.

The tax rate in the foreign country compared with the U.S. tax rate also makes a difference. For instance, a higher foreign tax rate means that it costs the employee more to work in the foreign jurisdiction, which is a benefit to the employer. Conversely, if the foreign tax rates are lower, the employee receives a benefit. Basically, the arrangement is not always considered fair.

Structure of the Foreign Assignment

Because of all the possibilities that can occur as a result of an expat's foreign assignment, it is imperative that planning occur well before the assignment begins. A few things should happen.

First, the employer should work with a service provider to develop an expatriate employee policy, often referred to as a global policy. This policy may touch on a variety of items, including, but not limited to, automobile policies, cultural orientation programs, pet policies, emergency and security planning, and, of course, the payment for and preparation of foreign, federal, and state taxes.

As mentioned previously, there is often a disparity between an assignee's U.S. tax liability and foreign tax liability. Employers can choose to handle this disparity in one of three ways:

1. Equalization,

2. Protection, or

3. Laissez-faire.

Equalization: If a company decides to enact an equalization policy, both the employer and the employee are no better or no worse for having participated in the overseas assignment. In other words, the policy is tax-neutral.

If a "hypothetical tax" exceeds the actual tax as filed on the assignee's U.S. tax returns, the assignee would owe the employer the difference. If the actual tax exceeds the hypothetical tax, the employer would reimburse the assignee for the difference.

The mechanics work as follows: After the tax return is filed, the hypothetical tax is figured considering only income and deduction items that the assignee would have incurred had he or she stayed in the United States. The hypothetical tax is then compared with the actual tax liability per the tax return plus any hypothetical withholding. Hypothetical withholding is withholding in addition to regular withholding that the employer holds on to so that in the event that the hypothetical liability exceeds the actual liability, the assignee does not have to settle the entire liability.

Some common questions should be kept in mind when reviewing an equalization policy. How are state taxes handled? If an assignee decides to sell his or her home as a result of the foreign assignment, is this factored in? Is all of the income equalized? Or is it just the employment income?

Protection: If a company enacts a tax-protection policy, the employer makes certain the employee bears no adverse effects from the foreign tax assignment.

When the hypothetical tax exceeds the actual tax, the employee retains the benefit and is not required to reimburse the employer the difference; when the actual tax exceeds the hypothetical tax, the employer will reimburse the assignee.

The actual calculation of tax under a tax-protection policy is a bit simpler in that there generally is no hypothetical withholding. All taxes are paid directly by the assignee. The employer will square up later.

Laissez - faire : This policy is just as it sounds—let the cards lie where they fall. A lot of smaller companies will typically go this route. Implementation of both equalization and protection policies can be time-consuming and expensive.

Structuring a Compensation Package

After the employer settles on a global policy, both the employer and the prospective assignee should sit down with the service provider to structure a compensation package that is both tax-efficient and fair. At this time, the employer and the service provider should explain to the assignee how he or she will be taxed and what to expect as far as services are concerned. These packages are generally much more complex than regular domestic compensation and usually cost employers two to three times more. They usually consist of a base salary and various other allowances, depending on the location of the foreign assignment.

The more common allowances are cost-of-living adjustments (COLAs), housing allowances, and moving allowances.

The COLA allows an expat to live off the same level of income that he or she would have had in the United States. The adjustment is calculated based on the employee's spendable income multiplied by a cost-of-living index. This income is taxable to the assignee.

Housing can be tricky. If the employee receives a cash allowance, it is generally taxable. Generally, the allowance is calculated by subtracting the amount of home country housing costs from the amount it would cost the expat in the foreign country. Sometimes expats are required to live on the employer's property as an unavoidable working condition. When this is the case, the housing is considered a tax-free fringe benefit.

Most of the time, employers will cover an assignee's moving expenses. This either comes in the form of an allowance or reimbursement upon submittal of expenses. This benefit is also taxable.

The benefits received vary by country. Special attention should be paid to the following countries: Iraq, Kuwait, Lebanon, Libya, Qatar, Saudi Arabia, Syria, United Arab Emirates, and the Republic of Yemen. These countries are specifically listed as boycott countries by Treasury under Sec. 999(a)(3). If an expat takes an assignment in one of these countries, he or she will have to file a Form 5713, International Boycott Report .

Lastly, although this topic probably deserves its own article, prior to the assignment, the company should make sure that it has a solid payroll strategy in place. For less-sophisticated organizations with limited personnel, hiring an outside payroll professional is recommended. Larger companies with a strong internal foreign tax department may be able to handle the payroll function internally. Consultation with a professional is needed in either case.

Planning for foreign work assignments can be time-consuming and requires expert knowledge, but it is necessary to ensure all the relevant tax issues are considered in advance. Only then can both the employer and the expat benefit fully from the experience.

Editor Notes

Michael Koppel is with Gray, Gray & Gray LLP in Canton, Mass.

Unless otherwise noted, contributors are members of or associated with CPAmerica International.

A $10.7 million compensation deduction miss

Short-term relief for foreign tax credit woes, irs rules that conversion of llc not a debt modification, a look at revised form 8308, state responses to federal changes to sec. 174.

This article discusses the history of the deduction of business meal expenses and the new rules under the TCJA and the regulations and provides a framework for documenting and substantiating the deduction.

PRACTICE MANAGEMENT

CPAs assess how their return preparation products performed.

The tax system in Russia underwent a comprehensive reform in the year 2001. This was to ease the tax burden on individuals and companies and to simplify the classes of payments for national insurance. The tax year in Russia is the year ending on December 31 . Russia is unique in that there are equal rates for unmarried and married individuals.

• Russia has a uniform rate of tax on the income of individuals. As of 2008, tax in Russia is payable at the rate of 13% for an individual on most income. ( 30% for non-residents - less than 183 days ).
• Russian residents pay 9% on dividend income which is deducted at source. Non-residents pay 15% on dividend income.
• The standard rate of Russia corporate tax in 2008 is 24%.

Moscow also has a 5% sales tax that is usually only encountered in top hotels.

If you have one employ, the company is the tax agent , and is responsible for withholding 30% (or 13% if you've been here 183 days of the past 12 months) monthly (pay-as-you-go system). At the end of the year, the company files a tax return for you. Once you can prove you've been in Russia for 183 days of the past 12 months, the company, as the tax agent that withheld the money, is responsible for returning the extra 17% to you. They can do it over several months, or in a lump sum. Some people have not been able to receive an actual payment, but receive instead a credit on future payments until it equalizes.

Many people avoid the troubles of figuring out tax by negotiating their salary net of tax, so the figure on your contract is what you receive. Your employer then deals with the tax without you needing to get involved at all .

There are countries that have an agreement with Russia to avoid double taxation. They are: Albania, Algeria, Australia, Austria, Armenia, Azerbaijan, Belarus, Belgium, Bulgaria, Canada, China, Croatia, Cyprus, Czech Republic, Denmark, Egypt, Finland, France, Germany, Greece, Hungary, Iceland, India, Indonesia, Iran, Ireland, Israel, Italy, Japan, Kazakhstan, Korea, North Korea, South Kuwait, Kyrgyz Republic, Lebanon, Lithuania, Luxembourg, Macedonia, Malaysia, Mali, Mexico, Moldova, Mongolia, Montenegro, Morocco, Namibia, Netherlands, New Zealand, Norway, Philippines, Poland, Portugal, Qatar, Romania, Serbia, Singapore, Slovakia, Slovenia, Spain, South Africa, Sri Lanka, Sweden, Switzerland, Syria, Tajikistan, Turkey, Turkmenistan, Ukraine, UK, USA, Uzbekistan, and Vietnam.

Update 10/07/2009

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Tax implications of an international assignment

You are off to another country to boost your career. While it may not be the first thing on your mind, a meeting with your tax advisors should be on your agenda. Your advisors can help you understand both home and host country tax implications, what documents will be required from you, and how to plan for foreign and domestic tax contingencies.

To help, we’ve gathered the responses of RSM global employer services professionals regarding questions asked by U.S. expatriates heading off to their international assignments. Their pragmatic advice covers a wide range of issues, including:

• Pre-assignment considerations
• Compensation changes
• Tax return filings
• Federal, state and social tax implications
• Tax equalization

We think you’ll find the guidance in this white paper will be helpful as you prepare for the next chapter in your career. Good luck on your international assignment!

RSM contributors

THE POWER OF BEING UNDERSTOOD

ASSURANCE | TAX | CONSULTING

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RSM US LLP is a limited liability partnership and the U.S. member firm of RSM International, a global network of independent assurance, tax and consulting firms. The member firms of RSM International collaborate to provide services to global clients, but are separate and distinct legal entities that cannot obligate each other. Each member firm is responsible only for its own acts and omissions, and not those of any other party. Visit rsmus.com/about for more information regarding RSM US LLP and RSM International.

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Tax equalization for foreign assignments

When sending employees abroad one of the issues that comes up is what the compensation package will look like. This will include topics like costs of living adjustments, housing costs, travel expenses etc.

One of the requirements set by most employees is that they do not want to see a decrease in net income and be worse off. This is actually an important matter because employers tend to think about total employee costs (therefore gross) whereas employees will tend to be focused on net income.

If nothing is agreed or arranged, a gross income  will apply and if the employee is sent to a jurisdiction with a higher tax burden, his or her net income will suffer. In most cases a general consensus will exist that this should not happen and this is often mentioned in the assignment letter under the heading ‘tax equalization’.

What Exactly Is a ‘Tax Equalization’?

In its most basic form, a tax equalization is an agreement between employer and employee that the tax burden on the employee should not change because of the assignment abroad. As most employment contracts state a gross salary, this means that the risks for this change in tax burden is shifted to the employer.

Why Does Tax Equalization Lead to Perceived Complexity?

  While the concept of a tax equalization is simple enough, several aspects will lead to complexity:

• The payments from the employer to the employee tend not to consist merely of regular salary. Other components such as pension payments, travel costs and other reimbursements may not be treated similarly in the host country. A thorough analysis is necessary and possibly a review of the salary package.
• Very often assignments will lead to an employee working in multiple countries. This means that taxes may be due in several jurisdictions and this will inherently increase complexity, especially if the days worked in these countries differ from month to month.
• In case of temporary assignments (which are the most common assignments) social security contributions will often remain due in the country where the employee is assigned from. The host country may not deem these payments to be fully deductible or non-taxable and therefore both complexity and tax burden may increase.
• Relevant data may sometimes become available after the monthly payroll has been processed, which can lead to necessary revisions.

Can the Administrative Burden Be Prevented?

While assignments will always increase complexity for both employer and employee, there are several factors that contribute to the administrative burden.

In general it can be stated that the clearer the policy is, the easier the process will be. Therefore, if the policy is limited to one or two sentences in the assignment letter stating that the assignment should not lead to an increased tax burden, this will often lead to questions and issues later on in the process.

It tends to make sense to define what type of taxes are targeted. If only national taxes are meant, this should be clearly reflected in the policy. Furthermore, wage taxes tend to be pre-levies to income tax. If an employee is entitled to refunds in income taxes because of increased wage taxes, this should be taken into account. Who will be preparing these income tax returns is therefore an important matter.

Having a clear overview of the complete salary package (including all types of reimbursements) and how these components are taxed will prevent surprises later on. Remember that what constitutes taxable wages differs from country to country. Having to gross up unexpected salary components afterwards will be a rather heavy financial burden for the employer and will often lead to an amount of uneasiness with the employee.

Especially in the case of longer assignments, determine how long the tax equalization will apply. Cost of living will differ between countries and very often high taxes in a country also mean that the national provisions are higher. It may not be unreasonable to end the tax equalization after a certain number of years and go back to a regular gross salary where the employee bears the risk for tax increases.

Tax Equalization Policy

In the cases when there is a relatively complex package of salary components and assignments, it is advisable for an employer to set out its tax equalization policy in a more elaborate and often separate document. This has the added benefit of creating a level of equality for the employees. Tax equalization is an often necessary and relevant part of assigning employees abroad. The clearer the policy and taxability of salary components is before the assignment, the less the administrative and financial burden will tend to be. Consult your Crowe Global Mobility specialist for more details .

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Apa yang dimaksud dengan Analisis MosCow?

Ketika membuat sebuah proyek tentu klien akan memberikan persyaratan-persyaratan yang mereka inginkan. Akan tetapi untuk memenuhinya kita harus membuat daftar prioritas dari persyaratan tersebut.

Sebagai Business Analyst, bagaimana untuk memprioritaskan kebutuhan mungkin tampak seperti pertanyaan yang mudah untuk dijawab tetapi ternyata terdapat berbagai komplikasi dan kompleksitas yang menarik. Teknik Moskow digunakan untuk memprioritaskan kebutuhan secara kolaboratif.

Dibawah ini adalah beberapa kompleksitas yang dapat dihadapi Business Analyst ketika datang ke kebutuhan prioritas.

1. Perspektif yang berbeda pada apa yang penting Ini mungkin adalah faktor paling penting yang mempengaruhi Analis kemampuan bisnis untuk mempermudah kegiatan di sekitar prioritas kebutuhan. Ini adalah semua tentang pemangku kepentingan utama dari proyek semua memiliki pendapat yang berbeda tentang apa yang merupakan tingkat tertentu prioritas. Sebagai contoh: Manajer proyek mungkin ingin memprioritaskan kebutuhan berdasarkan ketika dia akan dapat memberikan (berdasarkan kerangka waktu, anggaran dan resourcing) setiap persyaratan sedangkan pemangku kepentingan bisnis mungkin ingin memprioritaskan kebutuhan murni didasarkan pada nilai itu akan memberikan dengan bisnis secara keseluruhan (terlepas dari kerangka waktu, anggaran atau resourcing). Ketika berhadapan dengan tim yang semua memiliki perspektif yang berbeda tentang apa yang penting sangat sulit untuk Business Analyst untuk mendapatkan prioritas yang benar setuju.

2. Kurangnya kepemimpinan Faktor ini berjalan bergandengan dengan faktor sebelumnya dimana orang memiliki perspektif yang berbeda tentang apa yang menjadi prioritas. Kurangnya kepemimpinan dalam proyek atau inisiatif tim menyebabkan kebingungan di sekitar apa yang penting dan ini adalah ketika orang akan berakhir memberikan perspektif mereka sendiri di sekitar prioritas daripada mengikuti prioritas bisnis atau pedoman. Hal ini menyebabkan masalah dalam berbagai cara dan dapat menempatkan Analis Bisnis dalam posisi yang sangat canggung. Kadang-kadang kurangnya kepemimpinan dapat berarti bahwa pemangku kepentingan kuat atau lebih senior mungkin akan persyaratan diprioritaskan sesuai dengan preferensi / timnya karena posisinya dan tingkat pengaruh dalam organisasi menjadi prioritas yang benar untuk kebaikan organisasi. Hal ini menyebabkan prioritas kebutuhan yang belum tentu dilaksanakan dengan cara yang paling efisien dan akibatnya buruk pada proyek secara keseluruhan. Sangat penting untuk Business Analyst untuk menerima arahan yang jelas dari manajer proyek atau proyek komite pengarah mereka tentang apa tujuan bisnis yang jelas (dengan prioritas relatif mereka diuraikan) bahwa persyaratan harus menyampaikan melawan sehingga Analis Bisnis dapat menggunakan prioritas tujuan bisnis ini untuk memandu percakapan saat kegiatan persyaratan prioritas berlangsung.

3. Tidak memprioritaskan persyaratan Dalam beberapa organisasi atau proyek tidak ada cukup usaha formal dan eksplisit dilakukan untuk memprioritaskan kebutuhan sama sekali. Ini tidak berarti persyaratan tidak di semacam prioritas, itu hanya berarti bahwa persyaratan tidak diprioritaskan dalam cara yang terstruktur dan kolaboratif. jenis pendekatan dapat menyebabkan masalah ketika harapan tidak dikelola tentang apa yang akan disampaikan tetapi juga dapat bahwa memprioritaskan persyaratan yang diambil sangat jelas dalam suatu jenis proyek dan karenanya cara yang informal ini bekerja dalam situasi seperti itu. Jadi meskipun Business Analyst harus sangat berhati-hati ketika memilih untuk tidak secara resmi melalui kegiatan persyaratan prioritas, dapat menjadi pendekatan yang paling logis dan cocok untuk jenis proyek tertentu.

4. tingkat Prioritas tidak didefinisikan dengan baik Kompleksitas terakhir atau pertimbangan untuk Business Analyst untuk membayar perhatian sebelum memulai persyaratan kegiatan prioritas hanya definisi dari tingkat prioritas dan apa setiap prioritas penting. Banyak organisasi telah mengadopsi metode atau mengatur tingkat prioritas yang mereka digunakan untuk menggunakan tanpa harus mencari cara yang paling efektif menemukan prioritas. Hal terbaik untuk Business Analyst adalah untuk menetapkan teknik analisis praktik bisnis yang disepakati terbaik untuk kebutuhan prioritas, seperti Analisis Moskow. Hal ini memastikan bahwa Business Analyst dapat yakin bahwa mereka menggunakan metode yang telah terbukti untuk bekerja di banyak analisis bisnis situasi kebutuhan prioritas yang berbeda.

Business Analyst memungkinkan sekarang melihat teknik Analisis Moskow dan bagaimana cara terbaik dapat diterapkan.

Definisi dari moscow itu sendiri adalah:

M ust : Persyaratan ini harus dimiliki untuk kebutuhan bisnis. Dianggap sebagai kebutuhan prioritas yang sangat tinggi untuk proyek dan menjadi bagian dari solusi akhir agar solusi yang dapat dianggap berhasil.

S hould : Persyaratan ini juga persyaratan-prioritas tinggi, dan setiap bit sama pentingnya dengan persyaratan dalam kategori must. Workarounds mungkin tersedia untuk persyaratan tersebut dan biasanya tidak dianggap sebagai waktu-kritis atau must-have.

C Ould : Persyaratan diinginkan adalah prioritas yang lebih rendah dan baik untuk memiliki kemampuan dalam larutan. Persyaratan ini tidak mempengaruhi apapun dalam solusi satu cara atau yang lain dan akan disertakan jika waktu dan sumber daya memungkinkan.

W on’t : Persyaratan ini tidak akan diterapkan dalam rilis solusi yang diberikan. Persyaratan ini dipertimbangkan untuk dimasukkan di masa mendatang (kebutuhan masa depan yang pemangku ingin memiliki) atau dihilangkan dari larutan sama sekali.

Teknik ini paling baik digunakan setelah mengumpulkan semua persyaratan solusi yang ada.

Menyusun persyaratan atau kepentingan, bertanggung jawab untuk menetapkan prioritas untuk persyaratan yang termasuk dalam lingkup tersebut. Semua Persyaratan diprioritaskan dengan menetapkan kategori untuk masing-masing (M, S, C atau W).

Jika ada beberapa pendapat yang berbeda tentang apa yang kategori untuk menetapkan ke suatu kebutuhan, suara dapat digunakan untuk mencapai konsensus. Hadir persyaratan dikategorikan dalam format yang mudah dibaca. Persyaratan harus ditinjau seluruh proyek sebagai kebutuhan stakeholder dapat berkembang dengan waktu.

Panduan The BABOK menyediakan 8 kriteria yang akan digunakan untuk menetapkan prioritas untuk kebutuhan Klien :

Nilai Bisnis : persyaratan manakah yang memberikan nilai yang paling bisnis? semakin besar nilai bisnisnya maka akan lebih diprioritaskan,

Bisnis atau Risiko Teknis : Beberapa persyaratan menimbulkan risiko yang signifikan dari kegagalan proyek jika tidak dilaksanakan dengan sukses. Analis dapat menetapkan prioritas tinggi untuk kategori ini persyaratan sehingga jika proyek tidak gagal, paling tidak upaya telah dikeluarkan.

Pelaksanaan Kesulitan : Persyaratan mana yang paling mudah untuk diterapkan? persyaratan mudah dapat menyebabkan cepat-menang dan memberikan kesempatan bagi tim proyek untuk membiasakan diri dengan unsur-unsur lain dari proyek sebelum mengambil lebih banyak persyaratan yang kompleks untuk implementasi.

Kemungkinan Sukses : Yang persyaratan dapat memberikan cepat-menang dan meningkatkan kemungkinan penerimaan proyek? Jika tujuan dari proyek ini adalah untuk menunjukkan nilai secepat mungkin dan memadamkan obrolan negatif, persyaratan yang memiliki probabilitas keberhasilan yang lebih tinggi akan diberikan prioritas tinggi.

Kepatuhan peraturan : Persyaratan yang diperlukan untuk kebijakan dan peraturan kepatuhan? Persyaratan ini adalah non-negotiable dan biasanya harus dilaksanakan dalam jangka waktu tertentu, menyebabkan mereka untuk didahulukan dari persyaratan stakeholder dalam beberapa kasus.

Hubungan dengan persyaratan lainnya : Persyaratan yang mendukung kebutuhan bisnis bernilai tinggi lainnya? Persyaratan tersebut dapat diberi prioritas tinggi karena link mereka untuk persyaratan penting.

Urgensi : Yang persyaratan memiliki tingkat tinggi urgensi? Kebanyakan stakeholder cenderung menempatkan prioritas tinggi pada persyaratan yang dibutuhkan seperti kemarin

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V. I. Lenin

Report on the tax in kind.

Report on the Tax in Kind Delivered at a Meeting of Secretaries and Responsible Representatives of R.C.P.(B.) Cells of Moscow and Moscow Gubernia

April 9, 1921 [1]

Written: 9 April, 1920 First Published: Pravda Nos. 81, 82 and 83, April 15, 16 and 17, 1921; Published according to the Pravda text Source: Lenin’s Collected Works , 1st English Edition, Progress Publishers, Moscow, 1965, Volume 32 , pages 286-298 Translated: Yuri Sdobnikov Transcription\HTML Markup: David Walters & R. Cymbala Copyleft: V. I. Lenin Internet Archive (www.marx.org) 2002. Permission is granted to copy and/or distribute this document under the terms of the GNU Free Documentation License

Comrades, one hears the most varied and highly confusing opinions on the question of the tax in kind and the change in our food policy, and also on the Soviet government’s economic policy. Permit me, by arrangement with Comrade Kamenev, to share our subjects in such a way that he will give a detailed outline of the laws which have just been issued. This will be all the more appropriate for he chaired the commission which was appointed by the Party’s Central Committee and later endorsed by the Council of People’s Commissars, and which drew up all the recent laws at a number of conferences with representatives of the departments concerned. The last of these laws was issued yesterday, and we saw it in the newspapers this morning. There is no doubt that each of these laws raises a number of practical questions, and it will take some work to familiarise all the local Party and Soviet workers with them and to devise the proper methods of applying them in the localities.

I should like to draw your attention to their general significance, or the principle behind them. How are we to explain the fact that the Soviet government and the dictatorship of the proletariat are about to accept some freedom of trade? To what extent can unrestricted trade and individual enterprise be permitted side by side with the socialist economy? To what extent can we permit such a revival of capitalism, which may seem to be inevitable with a free market, however restricted? What has called forth this change? What is its real meaning, character and significance? And how should members of the Communist Party understand it? How is it to be explained, and what are the limits of its practical application? This, approximately, is the task I have set myself.

The first question is: what has called forth this change, which many think to be too drastic and not sufficiently justified?

The fundamental and principal reason for the change is the extraordinarily acute crisis of peasant farming, and its very difficult condition, which has proved to be much harder by the spring of 1921 than could have been expected. On the other hand, its consequences have affected the restoration of our transport system and of our industry. I should like to point out that most mistakes on the question of substituting the tax in kind for the surplus-grain appropriation system, and on the significance of the change, are made because there is no effort to analyse the nature of the change and its implications. Here is a picture of peasant farming by the spring of 1921: an extremely severe crisis caused by the war-time ruin and aggravated by a disastrous crop failure and the resultant fodder shortage (for the failure also affected the hay crop) and loss of cattle; and the weakening of the productive forces of peasant farming, which in many places was doomed to utter ruin. And here we come to this question: what is the connection between this terribly acute crisis of peasant farming and the Soviet government’s abolition of the surplus-grain appropriation system? I say that if we are to understand this measure we must ask ourselves: what is the transition we are making?

In the event of a workers’ revolution in a country with a predominantly peasant population, with the factories, works and railways taken over by the working class, what, in essence, should be the economic relations between the working class and the peasantry? They should obviously be the following: the workers producing in the factories and works, which now belong to them, all that is necessary for the country—and that means also for the peasants, who constitute the majority of the population—should transport all these things on their railroads and river vessels and deliver them to the peasants, in return for the surplus agricultural produce. This is absolutely obvious and hardly requires detailed explanation although it is constantly forgotten in the tax discussions. But it should be borne in mind, because if we are to explain the significance of the tax in kind, which is only a transitional measure, we must have a clear understanding of what we want to achieve. What I have said makes it clear that we do not want the peasants’ products to be delivered to the workers’ state as appropriations of surplus grain, or a tax. We want them in exchange for all the goods the peasants need delivered to them by our transport system. We must have such an arrangement. It is a basis for the economy of a country which has adopted socialism. If peasant farming is to develop, we must also assure its transition to the next stage which must inevitably be one of gradual amalgamation of the small, isolated peasant farms—the least profitable and most backward—into large-scale collective farms. That is how socialists have always visualised it, and that is exactly how our own Communist Party sees it. I repeat, the greatest source of error and confusion is in appraising the tax in kind without making allowance for the specific features of the transitional measures which we must take, if we are to attain the goals which we can and must reach.

What, then, is the tax in kind? It is a measure in which we see something of the past and something of the future. A tax is something the state takes from the population without compensation. If it is fixed at approximately one half of last year’s rate of surplus-grain appropriations it alone will not suffice for the workers’ state to maintain its Red Army, the whole of industry, and the whole of the non-agricultural population, and to develop production and relations with foreign countries, whose assistance in the way of machinery and equipment we need. On the one hand, the workers’ state wants to rely on the tax at approximately one-half the surplus-grain appropriations rate, and on the other, on the exchange of manufactured goods for the surplus products of peasant farming. Hence, the tax contains a moiety of the old appropriation system and a moiety of that which is the only correct system, namely, the exchange of the manufactures of big socialist factories for the products of peasant farming through the medium of food supply organisations of the working-class state and workers’ and peasants’ co-operative societies.

Why are we compelled to resort to a measure of which a moiety belongs to the past and a moiety only is put on proper lines? After all, we are not at all sure that we shall be able to put it on proper lines at once, or that it will be at all considerable. Why are we compelled to resort to such a half-measure? Why must we rely on such measures in our food and economic policy? What is it that makes it imperative? Everyone knows, of course, that it is not the Soviet government’s preference for some particular policy. It is the grinding need and the desperate situation. You know that for several years after the victory of the workers’ revolution in Russia, after the imperialist war, we had to endure a civil war, and it is now no exaggeration to say that Russia suffered more than any other country involved in the imperialist war, including those which had suffered because it was fought on their territory. For after four years of imperialist war we endured three years of civil war, which brought more havoc and industrial dislocation than any external war, because it was fought in the very heart of the country. This terrible devastation is the main reason why initially during the war—particularly when the Civil War cut us off from grain areas, like Siberia, the Caucasus and the whole of the Ukraine, and from our supplies of coal and oil, and reduced our possibilities of obtaining other types of fuel—we could hold out—in a besieged fortress—only through the surplus-grain appropriation system, that is, by taking from the peasant whatever surplus produce was available, and sometimes even a part of his necessaries, in order to keep the army in fighting trim and to prevent industry from going to pieces altogether. During the Civil War, this problem was one of extraordinary difficulty, and was declared insoluble by all the other parties. Take the Mensheviks and Socialist-Revolutionaries, i.e., the parties of the petty bourgeoisie and the kulaks. At the most acute moments of the Civil War they did the most shouting about the Bolsheviks’ having undertaken a crazy task, and the impossibility of holding out when all the powers were assisting the whiteguards. Indeed, the problem was one of exceptional difficulty, and called for a supreme effort. It was successfully solved only because of what, you might say, was the superhuman sacrifices on the part of the working class and the peasantry. The working class never suffered such malnutrition, such starvation, as it did in the first years of its dictatorship. This naturally left as the only alternative the appropriation system, which meant taking from the peasant all of his surplus and a part of his necessaries. He was told: “You, too, will have to go hungry for a while, but together we shall save our cause and drive off Denikin and Wrangel.” That was the only conceivable solution.

This was not an economic system or an economic plan for a policy, adopted from a number of possible choices. That was not the case at all. We could not think of restoring industry without ensuring a minimum of food and fuel. Appropriation of surpluses without remuneration—because you can’t call paper currency remuneration—was the only answer to the task we set ourselves to preserve the remnants of industry, to keep the workers from dispersing altogether, and to maintain the army. We had no other way out. That is what we are discarding, and I have already told you what we are adopting. The tax is to help us make the transition. If it were possible to restore our industry faster, then perhaps, with a better harvest, we could make an earlier transition to the exchange of manufactured goods for agricultural products.

Many of you may remember that the question of switching efforts to the economic front was raised at the Ninth Party Congress. At the time, all attention was focused on it. We thought that we had finished with the war: after all, we did offer bourgeois Poland incredibly favourable peace terms. But the peace was disrupted, and there followed the Polish war and its sequel—Wrangel, etc. The period between the Ninth and the Tenth congresses was almost entirely a period of war. You know that we signed a final peace treaty with the Poles only very recently; and a few days ago we signed a peace agreement with the Turks, which alone will rid us of interminable wars in the Caucasus. We have only now concluded a trade agreement with Britain, which is of world-wide significance. Only now has Britain been compelled to enter into commercial relations with us. America, for example, still refuses to do so. This will give you an idea of how hard it was for us to extricate ourselves from the war. Had we been able to realise the anticipations of the Ninth Congress right away, we would, of course, have been able to provide a much larger quantity of goods.

Today I had a visit from Comrade Korolyov of Ivanovo-Voznesensk, our most industrial, proletarian, Red gubernia. He gave me some facts and figures. In the first year only six factories were in operation, and not one of them ran for a month without stoppages. Industry was grinding down to a standstill. During the past year, 22 factories were started for the first time, some running for several months, others up to half a year, without stoppages. The planned target was set at 150 million arshins, and according to the latest figures they produced 117 million arshins, getting only half the fuel they had been allocated. That is how production plans were disrupted, not only in Ivanovo-Voznesensk, but all over Russia. This was due to a large extent to the decline of peasant farming, to loss of cattle, and the impossibility of transporting a sufficient quantity of firewood to the railway stations and river wharves, all of which gave Ivanovo-Voznesensk less firewood, less peat, and less oil than it should have had. The miracle is that, with only half the fuel they should have got, they turned out 117 million arshins of the planned 150 million. They increased the productivity of labour and transferred the workers to the best factories, obtaining a high percentage of output. Here is a pretty good example, on our own doorstep, illustrating our position. The Ninth Congress fixed the textile target output at over 600 million arshins, but we produced less than one-third of this because even Ivanovo-Voznesensk Gubernia, which proved to be the best, made only 117 million arshins. Picture to yourselves Russia’s millions and these 117 million arshins of cotton goods! This is poverty! The rehabilitation of industry lagged on such a scale that by the spring of 1921 it seemed to be quite hopeless. We had to have a huge army, and it was built up to several millions. Because of the dislocation of transport, it was very hard to demobilise it quickly in the winter. We did it only by a supreme effort.

That was the situation we faced. Was there any other way out but to cut food appropriations to the limit, taking 240 million poods of grain instead of 423 million? That is the least we must collect with a medium harvest, if we are to get by. If we are to have more, we must give peasant farming an opportunity to revive. This requires some measures, and the best one, of course, would be to restore large-scale industry. The best and the only economically correct measure would be to increase industrial output and give the peasant more of the things he needs, not only cotton goods for the farmer and his family, but also badly needed machines and implements, even if they are of the simplest kind. But the metal industry was in the same state as the textile industry. That was the situation we faced. We failed to restore industry after the Ninth Congress because we were hit by a year of war, fuel shortage, lack of transport facilities, and the prostration of peasant farming. What can be done to give the utmost assistance to peasant farming? Only a reduction of food appropriations and their conversion into a tax of 240 million poods, given a medium harvest, and even less, if the harvest is bad. The peasant must be sure that after paying a certain amount, fixed at the minimum level, he will be absolutely free to grow as much as he can and use the rest of his products to get what he needs and improve his farm not only with the help of industry, which would be the best and most rational way, but would take more resources than we now command. The tax is fixed at the minimum, and its enforcement in the localities will stimulate small industry, for we cannot set large-scale industry to rights as soon as we should like. This has been proved by the Ivanovo-Voznesensk programme, which yielded the largest portion of what we had planned for. We must wait another year until fuel stocks are large enough to ensure the operation of all the factories. We shall be lucky to do it in a year, or even two. Can we assure the peasant of supplies? We can, if the harvest turns out to be a good one.

When the question of the tax in kind was being decided at the Party Congress the delegates were given a pamphlet by Comrade Popov, Director of our Central Statistical Board, on grain output in Russia. An enlarged edition will be published within a few days, and all of you should read it. It gives an idea of grain production, with the figures calculated from the returns of our census, which gave us the exact figures of the population and an estimate of the size of farms. It says that with a yield of 40 poods per dessiatine, peasant farming on Soviet Russia’s present area could provide 500 million poods of surplus grain that would cover the 350 million poods required by the urban population and leave us a fund for foreign trade and the improvement of peasant farming. The harvest was so bad that the yield was no more than an average of twenty-eight poods per dessiatine. This produced a deficit. If we accept the statisticians’ figure of requirements at eighteen poods per head, we must subtract three poods per head and oblige every peasant to go on short rations in order to keep the army and the industrial workers on half-rations. In that situation, we could do nothing but reduce the surplus appropriations to a minimum and convert them into a tax. We must concentrate on improving small peasant farming. We had no cotton goods, machines or other goods produced by large factories to give the peasant farmers, but it is a problem requiring urgent solution, and we have to solve it with the aid of small industry. We should have some results from the new measure this very first year.

Now, why is peasant farming the focus? Because it alone can give us the food and the fuel we need. If the working class, as the ruling class exercising its dictatorship, wants to run the economy properly, it must say: the crisis of peasant farming is the weakest spot. It must be remedied, and another start made on the revival of large-scale industry, 90 that in Ivanovo-Voznesensk district, for instance, all 70 factories—and not just 22—are running again. These large factories will then satisfy national demand, and the working class will deliver the goods to the peasants in exchange for farm produce, instead of taking it in the form of a tax. That is the transition we are making, and the price is short rations all round, if we are to save those who alone can keep what is left of industry and the railways going, and the army in the field to fight off the whiteguards.

Our grain appropriations-were maligned by the Mensheviks, who said that the Soviet power had given the population nothing but grain appropriations, want and destruction. They gloated over the fact that after the partial restoration of peace, after the end of the Civil War, the swift rehabilitation of our industry had proved to be impossible. But even the richest countries will take years to get their industry going full blast again. Even a rich country like France will take a long time to revive her industry, and she did not suffer as much from the war as we did, because only a small part of her territory was devastated. The astonishing thing is that in the first year of a partial peace we were able to start 22 factories out of 70 in Ivanovo-Voznesensk, and to produce 117 million arshins of cotton goods out of an anticipated 150 million. The grain appropriations had once been inevitable, but now we have had to change our food policy: we have had to switch from the surplus appropriation system to the tax. This will undoubtedly improve the peasant’s condition, and give him an assurance and a sense of certainty that he will be free to exchange all his available grain surplus at least for local handicraft wares. This explains why the Soviet government must conduct an economic policy on these lines.

Now, in conclusion, let me explain how this policy can be reconciled with the communist standpoint and how it has come about that the communist Soviet power is promoting a free market. Is it good from the standpoint of communism? To answer this question we must make a careful examination of the changes that have taken place in peasant farming. First, we witnessed the assault of the whole of the peasantry on the rule of the landowners, who were fought both by the poor peasants and the kulaks, although, of course, their motives were different: the kulaks wanted to take the land away from the landowners to develop their own farms. That was when it became clear that the kulaks and the poor peasants had divergent interests and aims. In the Ukraine, this divergence of interests is still much more in evidence than it is over here. The poor peasants could derive very little direct benefit from the transfer of land from the landowners to themselves, because they had neither the materials nor the implements. We find the poor peasants organising to prevent the kulaks from seizing the land taken away from the landowners. The Soviet government helped the Poor Peasants’ Committees that sprang up in Russia and in the Ukraine. [2] As a result, the middle peasants have become the predominant element in the rural areas. We know this from statistics, and everyone who lives in the country knows it from his own observations. The extremes of kulak and poor have been rounded off, and the majority of the population have come closer to the status of the middle peasant. If we want to raise the productivity of our peasant farming we must reckon chiefly with the middle peasant. The Communist Party has had to shape its policy accordingly.

Since the middle peasants now predominate in the rural areas, we must help them to improve their farming; moreover, we must make the same demands on them as we do on the workers. The principal question discussed at the last Party Congress was that of food propaganda: concentrate on the economic front, raise the productivity of labour and increase output. No progress is possible unless these tasks are fulfilled. If we say this to the worker, we must say as much to the peasant, but will demand in return that, after paying the tax, he should enlarge his farm, in the knowledge that no more will be exacted from him and that he will be free to use the whole of his surplus to develop his farm. Consequently, the change in policy in respect of the peasants is due to the change in their status. There are more middle peasants in the make-up of the rural areas and we must reckon with this, if we are to boost the productive forces.

Let me also remind you of the arguments I had with the “Left Communist” group in 1918, after the conclusion of the Brest-Litovsk peace. [3] Those who were in the Party at the time will remember that some Communists feared that the conclusion of the Brest Peace would disrupt all communist policy. In the course of the argument with these comrades I said, among other things: State capitalism is nothing to fear in Russia; it would be a step forward. That sounded very strange: How could state capitalism be a step forward in a Soviet socialist republic? I replied: Take a close look at the actual economic relations in Russia. We find at least five different economic systems, or structures, which, from bottom to top, are: first, the patriarchal economy, when the peasant farms produce only for their own needs, or are in a nomadic or semi-nomadic state, and we happen to have any number of these; second, small commodity production, when goods are sold on the market; third, capitalist production, the emergence of capitalists, small private capital; fourth, state capitalism, and fifth, socialism. And if we do take a close look we shall find all these relations in Russia’s economic system even today. In no circumstances must we forget what we have occasion to see very often, namely, the socialist attitude of workers at state factories, who collect fuel, raw materials and food, or try to arrange a proper distribution of manufactured goods among the peasants and to deliver them with their own transport facilities. That is socialism. But alongside is small enterprise, which very often exists independently of it. Why can it do so? Because large-scale industry is not back on its feet, and socialist factories are getting perhaps only one-tenth of what they should be getting. In consequence, small enterprise remains independent of the socialist factories. The incredible havoc, the shortage of fuel, raw materials and transport facilities allow small enterprise to exist separately from socialism. I ask you: What is state capitalism in these circumstances? It is the amalgamation of small-scale production. Capital amalgamates small enterprises and grows out of them. It is no use closing our eyes to this fact. Of course, a free market means a growth of capitalism; there’s no getting away from the fact. And anyone who tries to do so will be deluding himself. Capitalism will emerge wherever there is small enterprise and free exchange. But are we to be afraid of it, if we have control of the factories, transport and foreign trade? Let me repeat what I said then: I believe it to be incontrovertible that we need have no fear of this capitalism. Concessions are that kind of capitalism.

We have been trying hard to conclude concession agreements, but, unfortunately, have not yet concluded a single one. Nevertheless, we are nearer to them now than we were several months ago, when we last discussed concessions. What are concessions from the standpoint of economic relations? They are state capitalism. The Soviet government concludes an agreement with a capitalist. Under it, the latter is provided with certain things: raw materials, mines, oilfields, minerals, or, as was the case in one of the last proposals, even a special factory (the ball-bearing project of a Swedish enterprise). The socialist state gives the capitalist its means of production such as factories, mines and materials. The capitalist operates as a contractor leasing socialist means of production, making a profit on his capital and delivering a part of his output to the socialist state.

Why is it that we badly need such an arrangement? Because it gives us, all at once, a greater volume of goods which we need but cannot produce ourselves. That is how we get state capitalism. Should it scare us? No, it should not, because it is up to us to determine the extent of the concessions. Take oil concessions. They will give us millions of poods of paraffin oil right away, and that is more than we produce ourselves. This is to our advantage, because in exchange for the paraffin oil—and not paper money—the peasant will give us his grain surplus, and we shall immediately be able to improve the situation in the whole country. That is why the capitalism that is bound to grow out of a free market holds no terrors for us. It will be the result of growing trade, the exchange of manufactured goods, even if produced by small industry, for agricultural produce.

Today’s law tells you that workers in some industries are to be issued a certain part of the articles manufactured in their factories in the form of a bonus in kind which they can exchange for grain. For example, provided they satisfy the requirements of the state, textile workers will receive a part of the textile goods they manufacture and will be able to exchange them for grain. This must be done to improve the condition of the workers and of the peasants as soon as possible. We cannot do this on a nation-wide scale, but it must be done at all costs. That is why we do not shut our eyes to the fact that a free market entails some development of capitalism, and we say: This capitalism will be under the control and surveillance of the state. We need have no fear of it because the workers’ state has taken possession of the factories and railways. It will help to stimulate the economic exchange of peasant produce for the manufactures of neighbouring craftsmen, who will satisfy some, if not all, of the peasants’ requirements in manufactured goods. The peasant economy will improve, and that is something we need to do desperately. Let small industry grow to some extent and let state capitalism develop—the Soviet power need have no fear of that. We must face the facts squarely and call a spade a spade, but we must also control and determine the limits of this development.

Concessions are nothing to be afraid of. There is nothing terrible about giving the concessionaires a few factories and retaining the bulk in our own hands. Of course, it would be absurd for the Soviet power to hand out the bulk of its property in the form of concessions. That would not be concessions, but a return to capitalism. There is nothing to fear in concessions so long as we retain possession of all the state enterprises and weigh up exactly and strictly the concessions we grant, and the terms and scale on which we grant them. Growing capitalism will be under control and supervision, while political power will remain in the hands of the working class and of the workers’ state. The capital which will exist in the form of concessions and the capital which will inevitably grow through the medium of the co-operatives and a free market, have no terrors for us. We must try to develop and improve the condition of the peasantry, and make a great effort to have this benefit the working class. We shall be able to do all that can be done to improve peasant farming and develop local trade more quickly with concessions than without them, while planning our national economy for a much faster rehabilitation of large-scale socialist industry. We shall be able to do this more quickly with the help of a rested and recuperated peasant economy than with the absolutely poverty-stricken peasant farming we have had up to now.

That is what I have to say on the communist appreciation of this policy, on why it was necessary, and why, if properly applied, it will bring improvement immediately, or, at all events, more quickly than if it had not been applied.

[1] The meeting was called by the Moscow Party Committee to explain the decisions of the Tenth Party Congress. It took place at Trade Union House, and was also attended by the Moscow Bolsheviks who had taken part in liquidating the Kronstadt counter-revolutionary mutiny, and the volost activists working among Moscow Gubernia peasant women. The report on the tax in kind was given by Lenin.

[2] The Poor Peasants’ Committees were set up under the June 11, 1918 decree of the All-Russia Central Executive Committee, “On the Organisation and Supply of Poor Peasants”. They were to take stock of the food stored on peasant farms; to uncover surplus food on kulak farms, and to help the Soviet food supply bodies in requisitioning such surpluses and distributing them among the poor peasants. They were also to distribute farming machines, manufactured goods, etc. The committees actually became organs of the proletarian dictatorship in the villages. Their activity embraced all spheres of work and signified the further development of the socialist revolution in the countryside. At the end of 1918, after they had fulfilled their tasks, the committees were merged with volost and village Soviets.

In the Ukraine, they existed from 1920 to 1933, uniting land starved and landless peasants.

[3] The Peace Treaty of Brest-Litovsk between Soviet Russia and the powers of the Quadruple Alliance (Germany, Austria-Hungary, Bulgaria and Turkey) was signed in Brest-Litovsk on March 3, 1918, and ratified by the Extraordinary Fourth All-Russia Congress of Soviets on March 15. The terms of the treaty were extremely onerous for Soviet Russia: Germany and Austria-Hungary secured almost complete control over Poland, nearly the whole of the Baltic area, and a part of Byelorussia; the Ukraine seceded from Soviet Russia and became a German dependency; the cities of Kars, Batum and Ardagan were ceded to Turkey. In August 1918, Germany made Soviet Russia sign a supplementary treaty and a financial agreement whose terms were even more onerous.[See also Glossary Entry on the Treaty ]

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