Tax laws hit working wives

JAKARTA. The government’s enforcement of tax return form (SPT) scrutiny has led to mounting complaints, particularly from working married women, as many have fallen victim to contradictory legal interpretations in regard to their tax filings.

The tax office received about 9.01 million SPTs as of Saturday, a 9 percent increase from 8.6 million in 2016, according to Directorate General of Taxation data.

However, the increased enforcement as part of the ongoing tax reform — after the ninemonth tax amnesty, has led to severe penalties for working women who make innocent errors in their SPT filing.

Having failed to input her SPT through the online platform, Lisa, 44, a marketing officer, was initially requested to do the filing manually at the tax office. But later tax officials ordered her to pay Rp 26 million (US$1,950) due to a “tax underpayment” they had uncovered.

“They said that I should have made a joint [SPT] filing with my husband, as specified in the 2008 Income Tax [PPh] Law. I protested because my previous tax filings were always fine and I have never been informed about that rule,” Lisa told The Jakarta Post on Sunday.

The problem lies in the contradictory interpretation of Article 8 of the PPh Law and Article 2 of the General Taxation System (KUP) Law. Paragraph 1 of Article 8 of the PPh Law stipulates that the income of a married woman is considered part of her husband’s earnings if she works for a separate employer.

The single-income consideration is not applicable if they decide to split their assets and incomes under a prenuptial agreement, or if the wife wishes to exercise her own tax rights and obligations, as stipulated in paragraphs 2 and 3 of the article.

Meanwhile, Paragraph 1 of Article 2 of the KUP Law stipulates that all taxpayers who meet requirements set by the laws should register for a tax number (NPWP). This also applies to married women even if they have arrangements with their husbands to split assets and incomes.

“The tax officials argued that the errors in my tax filings in the past were probably passed over. But with more tax officials employed [as part of tax reform efforts], he was sure such omissions were less likely to occur in the future,” Lisa said.

Aulia, 30, a private auditor, said she still held a separate NPWP from her husband and had yet to receive any warning from the tax office. Because of the material consequences, she preferred to keep her problem below the radar.

“I could go to the tax office with my husband and talk about an income-separation plan. But, we’d have to pay more than Rp 8 million in tax underpayments. Thus, I’ve chosen to declare myself as a ‘single’ tax payer,” Aulia told the Post.

The regulations director at the taxation office, Yunirwansyah, said women working for an employer, in accordance to the PPh Law, could keep their own NPWPs and separately file SPTs without incurring any material consequences if they could provide a prenuptial agreement on asset and income separation.

“Without it, the working wife still can have her own NPWP and pay her own taxes, but the tax office needs to merge her income with her husband’s first to calculate the income tax, because a family is regarded as a unified economic unit in the law,” he told the Post.

As a consequence, he said, progressive taxation would be levied on the combined net incomes of the two NPWP holders and each was required to pay tax at proportional rates, leading to underpayments from the income tax that employers had deducted from the wife’s monthly salary.

Tax expert from the Center for Taxation Analysis Yustinus Prastowo called for the tax office to revise the contradictory laws on career women’s NPWPs as part of the tax-reform agenda. “In international practice, both joint and separate filings pay the same level of tax,” he said.

The Directorate General of Taxation’s revenue and compliance director, Yon Arsal, said the tax office had not yet retrieved details on the number of SPTs filed by working women, as it would take further research.

Govt urged to revise contradictory laws on working women’s NPWPs Tax penalties await women with separate NPWPs but united assets.