The Organizational Procedures Dimension of Application of Modernization of Taxation Administration

39 a formal provision in the taxation laws. While the material compliance is a situation where taxpayer substantively meets all material provisions of the taxation. Material compliance may include formal compliance. From several explanations that have described above, it can be concluded that the taxpayer compliance is compliance fulfill all taxation laws, such as taxpayer compliance in registering, compliance in reporting, compliance in the calculation and payment of payable taxes as well as taxpayer compliance in the payment of arrear of payable taxes. 2. The Factors That Affect Taxpayer compliance According to Franzoni in Banu 2008 taxpayer compliance can be seen from several perspectives and it is influenced by several factors: 1 their tendency ons public institutions in this case the Directorate General of taxes; 2 a justice who is felt by taxpayer from the existing system; and opportunity over the possibility of detected violation and punished in accordance with the existing legislation. Meanwhile, according to Eliyani in Lasnofa 2010 level of compliance is affected by several factors, namely the condition of a countrys tax administration system, service on the taxpayer, tax law enforcement, inspection of the taxes and tax rates. Awareness and compliance to meet the obligation of taxation also depends on the willingness of the taxpayer, to the extent that taxpayer will comply with the provisions of the legislation. 40

3. Criteria of Taxpayer compliance

According to the Decree of Minister of Finance no. 544KMK.042000, about taxpayer’s criteria that can be given the preliminary tax overpayment as changed with the decree of Minister of Finance no. 235KMK.032003, that taxpayer’s criteria are as follow: a. Timely in delivering notification letter for all kinds of tax in the last two years b. In the last year of lately periodic tax form delivery is not more than 3 periods of tax and not for each kinds of tax and not in a row c. The lately periodic tax form is not delivered more than due date of the next periodic tax form. d. Does not have tax arrears for all kinds of tax, except already received the permission for postponing the tax payment, not including for the tax arrears related with the annual tax form released for the last two year of tax period. e. Has not been ever punished caused by doing criminal action in the area of taxation over 10 years. f. The audited financial statement done by public accounting firm or Development and Financial Supervisory Board must have unqualified opinion or unqualified with explanation as long as the explanation does not influence the fiscal profit and loss. Audited report must be composed widely, presenting reconciliation of commercial and fiscal profit and loss.