Taxation 2

Violetta Winona (008201800015)

Tax Analysis

In the script for The Laundromat, which was directed by Steven Soderbergh, Scott Z. Burns
wrangled the messy corruption tale. The film unspools like a series of intertwined vignettes, all
based around the vast cache of leaked documents that surfaced in 2016 (Panama Papers) and
revealed corruption and tax avoidance around the world. The Panama Papers shed light on the
hidden riches of offshore shell firms owned by the rich and powerful. Based on the real story of
Panama Papers, The Laundromat attempts to demonstrate how the wealthy used loopholes in tax
codes in different countries and sleight-of-hand tactics, and how they influenced average citizens
- including Ellen Martin (Meryl Streep) who lost her husband in a tour boat crash and then was
unable to receive insurance benefits because the liability coverage of the boat company came
from a fake shell company.

Panama is a well-known tax haven, a country that levies very low to no taxes on multinational
firms and provides no financial regulation, thereby becoming a refuge for global riches that
would either draw scrutiny or be taxed more heavily in its home countries. The leaked files were
documents from one of the world's largest offshore law firms, Mossack Fonseca, based in
Panama, which specialized in forming shell companies, making it harder for the governments of
wealth holders to audit them.

For instance, a company has an income of 10 trillion and the company would like to avoid the
tax. The trick is by investing some of the company’s money in a shell company (a shell
company, this company usually stands legal but there are no assets or liabilities, only capital) and
after investing in a shell company later the shell company will use the money to buy property in
countries with low taxes, for example, most countries of African origin. Then after that the shell
company will sell the property back to the origin company (pretending to sell it in order to be
legal in the eyes of the company but actually in the real transaction the company doesn't give
anything), then the company will automatically pass the tax and can easily get lots of assets.

In the film the secrets of offshore corporations are further discussed. Powerful individuals and
companies argue that establishing a foreign company in a "tax paradise" (like Panama) for
owning personal or productive properties is not illegal. The problem here is that it is appropriate
to register private or productive properties and pay taxes in the capital owner's country of
residence. Such jurisdictions encourage tax avoidance elsewhere because tax paradises have
special regulations that allow non-resident citizens / corporations to register their assets there. In
other words, to the benefit of wealthy individuals and companies, the economic interests of
capital owners reconfigure the relationship between residency and tax responsibilities in tax
paradises. It also illustrates the fact that people have various reasons to use shell companies, to
defend them from “raids” by criminals, and to get around hard currency restrictions.

In Indonesia, there is no comprehensive regulation regarding the permissibility of saving money

abroad so that this opportunity can be used by taxpayers to save money abroad. However, this
action is clearly very unethical because the results of the funds obtained by them are actually
mostly come from their income in the country. Therefore, they should pay taxes in Indonesia,
instead of avoiding or paying low taxes in other countries. It also resonate with the tie breaker
rule of international tax which determine the country where the tax payers are obligated to fulfill
its tax obligation. Furthermore, the easiness to use the services of establishing offshore
companies, making anyone (individuals/companies) will be very interested in establishing
offshore companies to run their businesses, help efforts to avoid taxes, conceal assets or money
laundering.

The tax collection system in Indonesia is a self-assessment where taxpayers are given the trust to
register, calculate, calculate, pay and report their own tax payable. The consequence of the
application of this self-assessment gives great responsibility to taxpayers to do their voluntary
compliance. There are two potential violations of voluntary compliance, namely tax avoidance
and tax evasion. If taxation avoidance such as the case of panama papers increase and more
people commit tax crime, then the state will suffer losses. Because taxes are the largest source of
state revenue by contributing around 70% of all state revenues.
Related to the Panama Papers case, then, one of the Government's necessary policies considered
is tax amnesty or tax amnesty, because of the policy this can increase domestic tax revenue.
When viewed from the side of the subject taxes, the funds that are abroad will be able to return
and if viewed from the side of the tax object, the number of taxpayers will increase. Looking
onto the Panama Papers case, it turned out to be using tax planning strategies to avoid taxes. It is
also concluded that a high awareness about ethics is needed so that someone is able to reveal the
mistakes of a party. In this case, the whistle blower is highly expected by the public because if it
only relies on reports from entities it can be manipulated.