The Importance of Young Generation’s Awareness to Understand Taxes from an Early Age

The Importance of Young Generation’s Awareness to Understand Taxes from an Early Age

Tax Consultant in Bali

Why should young people understand about taxes from an early age?

Considering the growing aspiration of the younger generation to become successful entrepreneurs; therefore, it is necessary to have an understanding of the taxes that must be paid in order to facilitate the conduct of business activities. The younger generation especially in Bali, as well as throughout the whole of Indonesia, should have an understanding of tax rules from an early age.

TAX

It is important to begin by understanding definition of taxes. The definition of taxes according to the Law: compulsory contributions to the State, which individuals or organizations owe according to the Law, without receiving a direct reward, and which is used for governmental purposes for the greatest welfare of the people. Paying taxes can help the State to finance expenditures, including: infrastructure, education, health, and other public services.

THE IMPORTANCE OF YOUTH AWARENESS

The awareness of the younger generation in paying taxes remains low. Indonesia’s Finance Minister, Ms. Sri Mulyani, said: “Tax revenue is essential for any independent country. A strong tax base is crucial for a country’s stability and growth”.

One benefit of taxes in Indonesia has been improved of health and public services, as seen during the Covid-19 pandemic. The government implemented various social protection programs for the community during that time, including Keluarga Harapan Program, cash social aid, basic food cards, internet aid for students, and other forms of government aid utilizing taxes. Ms. Sri Mulyani also said that whatever your profession, it is essential to recognize the significance of paying taxes to the government by setting a portion of your income aside.

To encourage tax awareness, taxpayers certainly need to have tax knowledge to act, organize strategies, and make decisions related to tax compliance. As a young generation, formal and non-formal education is available for obtaining taxation knowledge. The better the taxpayers’ awareness of tax obligations, the higher their level of implementation which contributing to increased compliance.

HOW TO CALCULATE CORPORATE TAX

Taxpayers in the form of business entities or companies are obligated to report and pay taxes since the date of their establishment in Indonesia.

If the company no longer operates or ceases to operate in Indonesia, this obligation will cease.

The calculation of the corporate income tax (or called with PPh) is governed by Law No. 36 of 2008, which is the fourth amendment of the Income Tax Law No. 7 of 1983, recently amended by Law No. 7 of 2021, which concerns the harmonization of tax regulations.

Calculation of Income Tax or Tax Payable

To calculate the income tax or tax payable, multiply the taxable income with the applicable tax rate. This formula determines the precise amount of income tax owed or payable.

The corporate income tax rate for the year 2023 is set at 22%.

TAX CONSULTANTS PLAY AN ACTIVE ROLE IN ENSURING TAXPAYER COMPLIANCE WITH TAX LAWS.

In Indonesia, including Bali, a world- renowned tourist destination, there is a growing number of small and medium sized enterprises.  As the times changes, these businesses are expanding. However, there are still numerous enterprises that lack an understanding of the taxation system in place. Not only small and medium businesses, but also large and professional companies face problems in meeting their tax obligations. Tax consultants play a crucial role in assisting taxpayers comply with the tax system and reduce the taxes owed according to the laws and regulations. Tax consultants, especially tax consultants in Bali, will assist taxpayers in accessing and explaining all the latest information about tax laws and tax systems in a language that is more easily understood by taxpayers. As a result, taxpayers will be able to meet the tax system into a language that is more easily understood by taxpayer. Thus, every taxpayer can fulfill their tax obligations punctually and accurately.

THE ROLE OF TAX CONSULTANTS FOR COMPANIES IN BALI

The role of a tax consultants in Bali is not only to provide tax advice to taxpayers, but they can also assist in the preparation of the necessary tax returns prior to filing with the tax office. With the end of the Covid-19 pandemic, numerous businesses in Bali are beginning to recover, and the necessity for tax consultants to aid entrepreneurs in fulfilling their tax obligations has resurfaced.

There are several benefits when a company uses the services of a tax consultant which can be seen as below.

1. More time to develop the business strategy.

An entrepreneur does not focus only on tax obligations. Using tax advisory services allows entrepreneur to spend time considering how the future strategy of the business will contribute to its growth.

2. Reduce company’s tax expenditure.

By relying on tax consultants to solve tax issues, companies can reduce their corporate tax expenses and fulfill their obligations within the boundaries of the law.

3. Better understanding of taxation guidelines and structure especially in companies.

A thorough comprehension of corporate taxation guidelines and structure is crucial for tax consultants to stay informed on current tax information and adapt to changes in the tax framework.

4. Provide quicker and more accurate resolutions.

Tax consultant can assist companies in offering solutions to reduce financial

uncertainty and detect problems that may occur in the future. With their expertise and proficiency, prominently those in Bali, tax advisors are able to assist corporate taxpayers, in this case a company, to solve tax problems accurately and quickly.

From the preceding explanation, it is seen that the role of tax advisors/ consultants is very helpful for taxpayers so that they do not have to manage of their tax obligations from the beginning to the end. Moreover, they can obtain comprehensive information from tax consultants, including tax reporting and payment, thereby ensuring compliance with tax requirements. As the number of businesses in Bali continues to grow, both new and established companies will require the services of tax consultants. Using the services of a tax consultant can increase tax compliance and promote community welfare. IBU Consulting is a trusted tax consultant in Bali that offers a range of services related to taxation. Their tax services can assist businesses in Bali with managing tax obligations, providing effective solutions to tax problems. The offered services encompass tax consultation, tax planning, tax due diligence, assistance with tax audits, legal remedies for objections and tax court appeals, tax refunds, and tax administration.

The reason why the authors mention IBU Consulting, one of the tax consultants in Bali, because the authors are students from one of the best universities in Bali, named Universitas Pendidikan Nasional (UNDIKNAS). The authors who have studied (interned) at IBU Consulting. Their internship at IBU Consulting provided us with a thorough understanding of taxation that aligns with our business needs. Apart of being students, the authors also have corporate obligations related to their business.

Authors: Ida Bagus Putu Hari Widhiatma and I Gusti Ayu Radhe Vrndavaneswari