Then, what happens if the Tax Invoice is made on a fictitious transaction?
Tax invoices made based on fabricated transactions can be categorized as Illegal Tax Invoices or also known as fictitious Tax Invoices. Based on the understanding in the Circular Letter of the Director General of Taxes Number SE-17/PJ/2018, Invalid Tax Invoices are Tax Invoices issued not based on actual transactions and/or Tax Invoices issued by Entrepreneurs who have not been confirmed as Taxable Entrepreneurs.
For the issuance of this fictitious Tax Invoice, there must be a penalty. Based on Article 39A of Law no. 6 of 1983 concerning General Provisions and Tax Procedures s.t.d.t.d. Law No. 11 of 2020 concerning Job Creation (“KUP Law”), any person who intentionally issues a fictitious Tax Invoice will be subject to criminal sanctions.
“Anyone who intentionally does so:
1. issue and/or use tax invoices, proof of tax collection, proof of tax withholding, and/or proof of tax payment that are not based on actual transactions; or
2. issue a tax invoice but not yet confirmed as a Taxable Entrepreneur
shall be punished with imprisonment for a minimum of 2 (two) years and a maximum of 6 (six) years and a fine of at least 2 (two) times the amount of tax in the tax invoice, proof of tax collection, proof of tax withholding, and/or proof of tax payment and at most 6 (six) times the amount of tax in the tax invoice, proof of tax collection, proof of tax withholding, and/or proof of tax payment.”
(Article 39A of the KUP Law)
Furthermore, PKP who issue fictitious Tax Invoices may also be subject to administrative sanctions based on the Regulation of the Director General of Taxes Number PER-16/PJ/2018 concerning Amendments to the Regulation of the Director General of Taxes Number PER-19/PJ/2017 concerning Treatment of Issuance and/or or Use of Unauthorized Tax Invoices by Taxpayers (“PMK-16/2018”). In PMK-16/2018, PKP that issues a fictitious Tax Invoice will be subject to administrative sanctions in the form of a suspended status. Based on Article 1 point 4 PMK-16/2018, the suspended status is a temporary deactivation by the DGT of the electronic certificate owned by the PKP.
“Suspend status is a condition where the Electronic Certificate owned by the Taxpayer is temporarily disabled by the Directorate General of Taxes so that the Taxpayer cannot issue a Tax Invoice.” (Article 1 point 4 PMK-16/2018)
Suspended status is assigned to PKP who are indicated to issue a fictitious Tax Invoice based on the results of research and development carried out by the DGT as regulated in Article 2 paragraph (1) PMK-16/2018 which reads:
“The Director General of Taxes is authorized to determine the Suspend Status of Taxpayers Indicated as Issuers based on:
a. the results of the research on the indication of the publisher;
b. IDLP Development and Analysis results;
c. the results of the development of the Preliminary Evidence Audit for other Taxpayers;
d. the results of the investigation of other taxpayers;
e. information obtained when the Taxpayer is undergoing Preliminary Evidence Audit; or
f. information obtained when the Taxpayer is being investigated.”
It is also regulated in Article 11 PMK-16/2018, for PKPs who issue fictitious Tax Invoices can be revoked the inauguration of PKP in office without prior stipulation of Suspend Status.
“Against a Taxpayer issuing an Invalid Tax Invoice based on a court decision that has permanent legal force and complies with the provisions as referred to in Article 2 paragraph (3), the inauguration of the inauguration of a Taxable Entrepreneur in ex-officio shall be revoked without prior determination of the Suspend Status.” (Article 11 PMK-16/2018)
Further provisions regarding the technical implementation of the Suspend Status on PKP issuing fictitious Tax Invoices can be seen in PMK-16/2018.
Thus, the issuance of Tax Invoices that are not based on actual transactions may be subject to criminal penalties and fines as regulated in Article 39A of the KUP Law. DGT can also determine the status of suspend until the revocation of the confirmation of PKP status to PKPs who issue fictitious Tax Invoices as regulated in PMK-16/2018.