FINANCIAL ENGINEERIN

G
:
IF YOU WANT
REDUCTION TAXABLE
INCOME YOU MUST
CREATE LIABILITIES
Accounting Science Doctoral Program
Faculty of Economics & Business
Padjadjaran University
Joko Ismuhadi *)

*) Student of Accounting Science Doctoral Program

Faculty of Economic & Business Padjadjaran University

It’s R – E = A – L , R – E is Income Statement; A-L is Balance Sheet; if you want reduction taxable income, you
must create liabilities
 ABSTRACT
This research comes from the author's experience as a tax examiner at the
Office of the Directorate General of Taxes who sees the phenomenon of
Group Corporate Taxpayers who for 5 consecutive years report overpayment
of corporate income tax returns, and overpaid value added tax returns every
month. . Therefore, the authors are interested in knowing these problems. This
research is a case study to determine the effect of financial engineering on
taxpayer compliance. The sample of this study used an integrated company
from upstream to downstream engaged in the processing of fresh fruit
bunches (FFB) into crude palm oil (CPO) registered at the Regional Office of
the Large Taxpayers for the period 2014-2019 through purposive sampling.
15 companies. The results show that taxpayers who carry out accounting
records choose a balance sheet account compared to the profit and loss
account which affects taxpayer compliance. The implication of this research
proves that taxpayers avoid taxes in a way that should record Income as
Liabilities and Expenses as Assets in an effort to avoid Corporate Income Tax
(PPh) and Value Added Tax (VAT). The real impact of financial engineering is
the 5-year corporate income tax return report, the VAT SPT overpayment
report.

Keywords: Financial Engineering, Tax Avoidance, Tax Aggressive, Scheme Transaction

It’s R – E = A – L , R – E is Income Statement; A-L is Balance Sheet; if you want reduction taxable income, you
must create liabilities
 Tax Reform

Since the end of 1993 to improve tax collection performance, tax reform policy
reforms have been carried out, namely by changing the tax collection system,
which was initially determined by the official assessment system (taxes determined
unilaterally by the government) to become a self-assessment system (taxpayers are
given the authority to calculate, calculate, deposit, and self-report the taxes).

To increase tax revenue in Indonesia, tax service offices (KPP) were expanded in
various cities in Indonesia. In order to reach taxpayers in DKI Jakarta Province to
the District / Kelurahan level. One of the tax service offices in DKI Jakarta is the
Large Taxpayer DGT Regional Office. Large Taxpayer RegionalOffices include
several Tax Service Offices (KPP) within the Large Taxpayer Regional Offices,
namely:
1. Large Tax Office One;
2. Large Tax Office Two;
3. Large Tax Office Three; and
4. Large Tax Office Four;

It’s R – E = A – L , R – E is Income Statement; A-L is Balance Sheet; if you want reduction taxable income, you
must create liabilities
 Research Questions:
The larger the Group Corporate Taxpayer, the smaller the
contribution of tax payments

Based on the author's experience as a Tax Auditor, it is

found that the taxpayers make use of enterprise resource
planning (ERP).

The authors suspect that taxpayers avoid tax by recording

accounting transactions that are deliberately misleading,
namely Revenues are recorded as Liabilities, and Expenses
are recorded as Assets by utilizing Intermediary Accounts,
where Intermediary Accounts are temporary accounts where
at the end of the accounting period or usually every month
with a balance of Zero (0).

It’s R – E = A – L , R – E is Income Statement; A-L is Balance Sheet; if you want reduction taxable income, you
must create liabilities
Basic Accounting Equation (BAE) :
Assets = Liabilities + Equity

Expanded Accounting Equation (EAE) :

Assets = Liabilities + Equity + [ (Revenues – Expenses) - Dividend ]

Mathematic Accounting Equation (MAE) :

Assets + Dividend + Expenses = Liabilities + Equity + Revenues

Tax Accounting Equation (TAE) :

Revenues - Expenses = Assets - Liabilities
Revenues = Expenses + Assets - Liabilities

It’s R – E = A – L , R – E is Income Statement; A-L is Balance Sheet; if you want reduction taxable income, you
must create liabilities
 The Mathematics of Numbers – Debit/Left Side
Debit/Left Side Cr edit/Right Side
10 = 4 + 6
25 15

The Rules of Debit Credit for Assets

Debit/Left Side Cr edit/Right Side
10 = 4 + 6
+ -

It’s R – E = A – L , R – E is Income Statement; A-L is Balance Sheet; if you want reduction taxable income, you
must create liabilities
 The Mathematics of Number – Credit/Right Side
Debit/Left Side Cr edit/Right Side
10 = 4 + 6
14 18

The Rules of Debit Credit for Liabilities

Debit/Left Side Cr edit/Right Side
10 = 4 + 6
- +

It’s R – E = A – L , R – E is Income Statement; A-L is Balance Sheet; if you want reduction taxable income, you
must create liabilities
 The Mathematics of Number – Credit/Right Side
Debit/Left Side Cr edit/Right Side
10 = 4 + 6
30 36

The Rules of Debit Credit for Equity

Debit/Left Side Cr edit/Right Side
10 = 4 + 6
- +

It’s R – E = A – L , R – E is Income Statement; A-L is Balance Sheet; if you want reduction taxable income, you
must create liabilities
 Figure 7: Analysis of Transaction of Purchasing Supplies on Account Payable
(Dr) BALANCE SHEET
(Cr)
(Dr) Supplies (Cr) (Dr) Account Payable (Cr)

Increasing, Increasing,
debited credited

Figure 8: Analysis of Transaction of Purchasing Supplies in Cash

(Dr) BALANCE SHEET
(Cr)
(Dr) Supplies (Cr)

Increasing,
debited

(Dr) Cash (Cr)

Decreasing,
credited C

It’s R – E = A – L , R – E is Income Statement; A-L is Balance Sheet; if you want reduction taxable income, you
must create liabilities
 Figure 9: Analysis of Transaction of Purchasing Supplies on Bank Overdraft Account (IDR)
(Dr) BALANCE SHEET
(Cr)
(Dr) Supplies (Cr) (Dr) Bank Overdraft Account (IDR)
(Cr)

Increasing, Decreasing, Increasing,

debited debited credited

(Dr) Affiliated Liabilities (Cr)

Increasing,
credited

Figure 12: Analysis of Transaction of Sales on Bank Overdraft Account (USD)

(Dr) BALANCE SHEET (Cr)
(Dr) Bank Overdraft Account (USD) (Cr)

Decreasing, Increasing,
debited credited

Affiliated Liabilibities (Cr)

(Dr)

Decreasing,
debited

(Dr) Reserve for Paid Up Capital (Cr)

Increasing,
credited

It’s R – E = A – L , R – E is Income Statement; A-L is Balance Sheet; if you want reduction taxable income, you
must create liabilities
 Case Study:
(Dr) BALANCE SHEET (Cr)

(Dr) Bank Overdraft Account (IDR) (Cr)

1.000.000 Raw Material
1.000.000 Raw Material
500.000 Forex
Cash In 2.500.000
2.500.000 2.500.000
Cash Management Service
(Dr) Bank Overdraft Account (USD) (Cr)
1.000.000 Raw Material
1.000.000 Raw Material
500.000 Forex
Cash In 2.500.000
(Dr) Supplies (Cr) 2.500.000 2.500.000
1.000.000
1.000.000 (Dr) Affiliated Loan (Cr)
1.000.000 2.000.000 Sales
1.000.000 2.000.000 Sales
4.000.000 4.000.000

(Dr) Foreign Exchange Profit and Loss (Cr) (Dr) Reserve of Paid Up Capital (Cr)
500.000 500.000
500.000 500.000
1.000.000 1.000.000

It’s R – E = A – L , R – E is Income Statement; A-L is Balance Sheet; if you want reduction taxable income, you
must create liabilities
(Dr) BALANCE SHEET (OWNER) (Cr)

(Dr) Time Deposit (Cr)

500.000 500.000
500.000 500.000
1.000.000 1.000.000

(Dr) BALANCE SHEET (Cr)

Supplies 4.000.000 Affiliated Loan 4.000.000

Foreign Exchange Profit and Loss 1.000.000 Reserve of Paid Up Capital 1.000.000
5.000.000 5.000.000

It’s R – E = A – L , R – E is Income Statement; A-L is Balance Sheet; if you want reduction taxable income, you
must create liabilities
 C

Profit & Loss Equity Balance Sheet

A. Profit & Loss

B. Balance Sheet

Tax Accounting Equation (TAE):

R-E=A-L

Profit & Loss = Balance Sheet

It’s R – E = A – L , R – E is Income Statement; A-L is Balance Sheet; if

you want reduction taxable income, you must create liabilities
In accordance with the Tax Accounting Equation (TAE); R -
E = A - L; above where R - E is a form of profit and loss
statement, and A - L is a form of balance sheet, so the
author draws a hypothesis that tax aggressive taxpayers are
influenced by substantive assets, substantive liabilities,
dividend distribution policies that are influenced by
ownership structure in a group. business ventures from
upstream to downstream.

HYPHOTESA
It’s R – E = A – L , R – E is Income Statement; A-L is Balance Sheet; if
you want reduction taxable income, you must create liabilities
 Dependent Variable:
Yi : tax aggressive
Independent Variables:
X1i : Substantive of assets
X2i : Substantive of liabilities
X3i : Dividend Policy
X4i : Shareholder Structure
e : Group of Companies

Yi = β0 + β1.X1i + β2.X2i + β3.X3i + β4.X4i + e

"There are relationship between substantive assets, substantive

liabilities, dividend policy and shareholder structure against tax
aggressive a group taxpayer". With 4 independent variables and 1
dependent variable, namely tax aggressive.

HYPHOTESA
It’s R – E = A – L , R – E is Income Statement; A-L is Balance Sheet; if
you want reduction taxable income, you must create liabilities
 X1

X2
Y
X3

X4

Korelasi Simultan dan

Korelasi Parsial
It’s R – E = A – L , R – E is Income Statement; A-L is Balance Sheet; if
you want reduction taxable income, you must create liabilities
It’s R – E = A – L , R – E is Income Statement; A-L is Balance Sheet; if
you want reduction taxable income, you must create liabilities
It’s R – E = A – L , R – E is Income Statement; A-L is Balance Sheet; if you want reduction taxable income, you
must create liabilities