Category Archives: tax

Shoveled: Garuda Boss Fired for Smuggling Harley Davidson Bike and Brompton Bicycles

Jakarta Globe, NUR YASMIN, December 5, 2019

The disassembled parts of a smuggled Harley Davidson Shovelhead are shown 
by customs officials in Jakarta on Thursday. (B1 TV Photo)

Jakarta. Flag carrier Garuda Indonesia's president director I Gusti Ngurah Ashkara is soon to be fired for allegedly smuggling a Harley Davidson motorcycle and two Brompton bicycles, State-Owned Enterprises Minister Erick Thohir said on Thursday.

The items were smuggled inside Garuda's brand new Airbus A330-900 Neo being delivered from its factory in Toulouse, France, in mid-November.

There were 22 passengers on the plane and four of them were Garuda directors: the president director, better known as Ari Ashkara, technical and services director Iwan Joeniarto, cargo and business development director Mohammas Iqbal and human resources director Heri Akhyar.

"As the SOE Minister, I will dismiss the Garuda president director. We will not stop there; we will look for other people who might have been involved in this case as well," Erick told a press conference in Jakarta.

The used Harley Davidson motorcycle had been disassembled prior to delivery and smuggled as parts. Customs officials found them wrapped in 15 boxes inside the plane's cargo area.

The Brompton bikes and accessories were found in three other boxes.

Erick said an audit by the customs office showed the smuggled items belonged to the president director, despite the baggage claim tags carrying different names.

Ari had instructed his subordinates to find him a classic Harley Davidson Shovelhead from the 1970s.

The used motorcycle was purchased in April 2019 with the help of a Garuda finance manager in Amsterdam.

"It's really sad that this [personal] transaction had to drag down an SOE," Erick said.

The Coordinating Minister for Maritime Affairs and Investment Luhur Binsar Pandjaitan said during a visit to Tongxiang, China, on Thursday that he fully supported Erick's decision.

"[An act like] this will hurt our investment climate," he said.

Finance Minister Sri Mulyani Indrawati meanwhile said smuggling the Harley and the Bromptons had cost the country up to Rp 1.5 billion ($107,000) in unpaid taxes.

"The Harley bike is valued at Rp 800 million and the Brompton bicycles cost Rp 50-60 million each," Sri Mulyani said.

"Everyone should always obey existing regulations," she told reporters.

Investment income – is it taxable?

Thursday March 25, 2010

Investment income – is it taxable?

IT IS the time of the year when some of us may feel uneasy as the deadline for filing our personal income tax return gets nearer. You may drag your feet when having to complete the return form (Form B or Form BE as the case may be) and procrastinate till the last minute as obviously paying taxes is not as exciting as receiving money from your investments.

After having received money from your investments in say, shares and property, have you considered whether the receipts are taxable?

Dividend income

In general, people are under the impression that dividend income is not required to be reported in the tax return. This is only true provided the dividend income is tax exempt as in the case where the dividend that is received is either a single tier dividend or is paid out of the exempt profits of the dividend-paying company. In the case where you received dividends where income tax has been deducted at source, such dividend income is taxable and consequently has to be declared in your income tax return.

Depending on your level of taxable income, you may actually obtain a tax refund from the Inland Revenue Board (IRB) if your tax bracket is at 24% or below.

Generally, the tax deducted by the company on the taxable dividend is at the rate of 25%. On the other hand, if your tax bracket is at 27%, then you are required to pay the 2% differential to the IRB.

In order to determine whether your dividend income is taxable or otherwise, you can look at the dividend vouchers. However, one common mistake in the reporting of taxable dividend income is where the actual amount received is declared as opposed to the gross dividend income, as stated in the dividend voucher.

Rental income

The other common investment income is rental income. Reporting of rental income would be simple if only the gross rental received without claiming deduction for expenses incurred in deriving the rental income was reported. As a smart investor with diversified investments, every penny saved or earned would be additional funding for your next investment.

Therefore, you should claim all the permissible expenses against the gross rental income. The permissible expenses would include assessment, quit rent, service charges, sinking fund contributions, fire insurance and property loan interest. In the case of a bank loan taken to finance a property which generated rental income, one has to remember that it is only the loan interest that is deductible and not the entire loan repayment amount.

Other rental-related expenses such as property agent’s commission and repairs may be deductible against the rental income. However, you would need to scrutinise such expenses in detail to establish if they are indeed deductible.

In the case of the property agent’s commission, where the property owned is being rented out for the first time, the commission paid for securing the first tenant would not qualify for a tax deduction. Subsequent commission paid to the property agent for securing tenants for the same property (after the first tenancy) would be deductible. Likewise, not all repair expenses incurred on the property could be deducted against the rental income.

If you were to repair a leaking roof and install a canopy at the verandah of the house at the request of the tenant, the expense incurred on the canopy would not be deductible as it would not be regarded as repairs and maintenance expense although the repair of the roof should qualify for a deduction.

Some points to take note of

Bearing in mind the penalty that can be imposed by the IRB in the event of an understatement of income in the tax return, you would have to be careful when determining the types of expenses to claim against your investment income. It is important that you do not make a claim for otherwise eligible expenses if you do not have the supporting documents to justify your claims.

If you have a property jointly owned with your spouse, the rental income will be taxed based on your share in the property. Correspondingly, your spouse would have to report the rental income based on his or her share in the property.

Where you and your spouse have investment income, you may be thinking of whether you should be filing for separate assessments or opting for a combined assessment. For most couples, a combined assessment is not beneficial as the combined income would push the tax rate to a higher bracket.

Further, a separate assessment would allow each person to claim the personal relief of RM8,000 whereas a combined assessment would only allow the person to claim either a wife or husband relief of RM3,000 in addition to the personal relief of RM8,000.

This would mean a loss of relief of RM5,000.

·Pauline Tam is executive director, KPMG Tax Services Sdn Bhd

Government to speed up reform of overseas tax

Government to speed up reform of overseas tax

Businesses may have to rethink their overseas expansion plans after the Treasury signalled it would accelerate plans to reform the way that it taxes the profits earned by companies’ foreign branches.

Stephen Timms, the financial secretary to the Treasury, told accountants in London last week that the Government would clarify the taxation of overseas profits from branches and legislate in next year’s Finance Bill.
Branches are permanent offices in overseas markets but are not structured in the same way as formal subsidiaries. They are used by a wide range of trading businesses as well as banks and insurance companies.
Ian Young, international tax manager at the Institute of Chartered Accountants of England and Wales, welcomed the Treasury’s decision to tackle branch taxation more quickly.
“It’s very sensible,” he said. “We need to have a coherent tax system that they don’t keep chopping and changing and modifying, which is what they seem to do at the moment. What businesses like is having some certainty.”
The Association of British Insurers agreed. Kerrie Kelly, director general of the ABI, said: “A more modern regime will help global businesses remain headquartered in the UK as well as attract those domiciled abroad.”
One impact could be that setting up an overseas presence becomes more expensive, Mr Young warned, as losses generated by an overseas office as it sets up could no longer be offset against UK profits.
“If we say you do something abroad we will not tax you, arguably you will not get relief if you make losses,” he said. “It might discourage people as when you set up a business you have lots of expenses and not a lot of profits, or it could encourage you to do it in a different way, perhaps through a local agent.”