TAX PLANNING IMPLEMENTATION IN PURCHASES OF FIXED ASSETS DECISION (CASE STUDY OF HMS SURABAYA, INDONESIA)

Kharisma Juwita Nuriga S.E Faculty of Economy and Business, Airlangga University, Surabaya, Indonesia. ...................................................................................................................... Manuscript Info Abstract ......................... ........................................................................ Manuscript History Received: 15 May 2020 Final Accepted: 20 June 2020 Published: July 2020


Analysis and Discussion of the Three Alternatives for Car and Chiller Purchases: Analysis and Discussion of Cash Alternatives:
In the alternative cash purchase data does not use data in the form of interest and installments, so that the burden can be used to reduce PKP in accordance with PP No. 36 of 2008 is the cost of depreciation. Table 4 is the calculation of depreciation expense for each asset along with the present value . HMS determines the use of the straight-line method in the depreciation of its fixed assets. Depreciation described in the table uses a tariff of 12.5%, because it is in accordance with PP No.36 of 2008, where cars and chillers are included in group two, which have an useful life of eight years. The use of the straight-line method causes depreciation that occurs on all three assets but is the same every year.

Analysis and Discussion of Bank Credit Alternatives: Analysis and Discussion of Bank Credit Alternatives for Cars:
Bank loan interest costs are calculated from the amount of credit installment payments for each period. The first step in calculating the cost of loan interest is to calculate the present value interset factor annuity (PVIFA) as follows: PVIFA = 1-(1 + r) -n = 879

Analysis and Discussion of Bank Credit Alternatives for Chiller:
The calculation of the cost of credit interest on the purchase of a chiller is the same as the calculation on purchasing a car. The following is PVIFA loan interest on the chiller. PVIFA = 1-(1 + r) -n = 1-(1 + 1.125%) -48 = 36.93263674 r 1.125% The calculation shows that the credit installment payments for each period are: a Chiller = PV loan = 1,100,000,000 = Rp 29,783,955 PVIFA 36,9326 Based on the results of these calculations, the amount of the chiller purchase credit installments to be paid each month is Rp. 29,783,955 , so the total loan installments paid are Rp . 1,429,629,852 . Total cost accrued interest in the amount of RP 329 629 852 . This value is obtained from the value of the remaining loan multiplied by the credit interest rate, which is 1.125% per period. From the two values, the value of the principal installment is obtained, namely the loan installment is reduced by the interest cost so that the principal installment is Rp 1,100,000,000. The calculation of the present value of the interest expense for the purchase of a chiller is Rp. 307,000,461, which indicates a value less than the interest cost without the present value . The calculation of costs other than interest costs that can be a deduction of PKP is the cost of depreciation, such as on a car purchase. Depreciation costs imposed on alternative purchases of bank loans are the same as cash alternatives, can be seen in table 5.
Chiller depreciation costs that occur annually are Rp. 137,500,000. This value is obtained from the acquisition price multiplied by the tarif in accordance with PP No. 36 of 2008, where the chiller is a fixed asset that is included in group two with an useful life of eight years. The total depreciation that occurred on the purchase of a chiller on bank credit was the same as in the cash alternative, which was Rp 1,100,000,000. This value is the same as the acquisition price because it has no residual value. The present value of the total depreciation expense incurred is RP 888,691,754.

Analysis and Discussion of Alternative Leasing: Analysis and Discussion of Leasing Alternatives for Cars:
According to Poere and Rosita (2013), if a company purchases fixed assets through leasing , then all costs incurred to lease payments plus administrative costs of leasing, which include payment of costs insurance and other costs that can be financed in order to calculate taxable income. One of the costs that can be financed is the lease installments per period. The calculation of the lease installment is the same as the calculation of the loan installment by calculating the PVIFA first. PVIFA calculation is as follows. Kijang Innova PVIFA = 1-(1 + r) -n = 1-(1 + 0.65%) -48 = 41.11985693 r 0.65% PVIFA Hi Ace Commuter = 1-(1 + r) -n = Value present value indicates a smaller number, due to the discount factor of 5% per year, or 0.417% per month. After calculating the installment of the lease and interest costs of leasing , fee may be deducted from the PKP is the cost of depreciation. After taking option rights, the acquisition value of fixed assets (at the value of the option) can be depreciated by the company according to the age and assets concerned. Table 5 below is a calculation of the cost of depreciation on the purchase of fixed assets along with the present value . Other costs that can also be used as a deduction from PFM are the execution costs and the provision fees. The provision fee charged for purchasing Kijang Innova and Hi Ace Commuter is the same, amounting to Rp 1,950,000 which is paid once at the beginning of the transaction. The execution fee charged on the Kijang Innova is 7,722% of the price of the car divided by 48 months, so the Kijang Innova execution fee per month is Rp 532,470. The total execution cost for 48 months is RP 25,558,554. The present value of the execution cost is Rp 23,119,596. The total execution cost for the Hi Ace Commuter for 48 months is 12,045% of the acquisition price of Rp. 51,479,366 or Rp. 1,072,487 per month. The present value of the e-association fee is RP 46,566,883. Value present value indicates a smaller number for their discount factor of 5% per year, or 0.417% per month.

Analysis and Discussion of Alternative Leasing for Chillers:
Calculation of the cost of leasing on the purchase of a chiller is not much different from a car. The main cost that can be used as a reduction in PKP is the cost of leasing . The initial calculation is to calculate the amount of the lease installments per period. This value is obtained from the PVIFA calculation as follows: PVIFA = 1-(1 + r) -n = 1-(1 + 0.802%) -48 = 39.71028415 r 0.802% a Chiller = PV loan = 1,100,000,000 = Rp. 19,390,443 PVIFA 39.7103 The calculation of the total lease installments that must be paid is Rp 930,741,262. The interest rate charged for chiller purchases is 9.63% per year or 0.802% per month. The total interest cost for the purchase of a chiller for 48 months amounted to Rp 160,741,262, with a present value of Rp 149,826,319 . The total principal installment for 48 months is RP 770,000,000, with a present value of RP 692,097,787. In addition to leasing fees , depreciation costs can also be calculated as a PKP deduction. Table 6 below is the calculation of the cost of depreciation on the chiller along with the present value . Depreciation charge rates charged on chillers in accordance with PP No. 36 of 2008 are 12.5%, where chillers are included in group two with an useful life of eight years. Depreciation expense every year is Rp. 68,750,000 obtained from 12.5% multiplied by the value of the option. The total depreciation expense is RP 550,000,000 with a present value of RP 348,156,622. In addition to calculating depreciation costs, it is also necessary to calculate the provision and execution costs. The provision fee charged for the purchase of a chiller is Rp 5,675,000 which is paid once at the beginning of the transaction. The execution fee charged is Rp.88,800 per month, so the total execution cost for 48 months is Rp 4,022,400 with a present value of Rp3,638,557 .

Comparison of Tax Savings:
The following is a comparative table of tax savings that will occur by calculating the deductible expense in selecting alternative fixed asset purchases. Tax Savings Comparison is also equipped with calculations based on present value (PV).   Based on the comparative calculation of the tax savings of the three purchase alternatives for the three fixed assets, it can be seen that two out of three purchases of fixed assets are more profitable in terms of taxes if purchased with alternative leasing with option rights. This is due to deductible expense on leasing alternatives that are higher than 883 cash and bank credit alternatives. The deductible expense on bank credit that is higher than leasing on the purchase of Hi Ace Commuter is caused by several things that cause the biggest tax savings to occur on bank credit, not on leasing . The existence of a credit interest rate of 13.5% which is higher than the leasing rate of 7.79% at Kijang Innova, 7.75% on Hi Ace Commuter and 9.63% on Chiller does not always lead to a greater total deductible expense. That is because there are other costs that can be recognized in the alternative leasing but not in the bank credit, namely principal installments, execution costs and provision costs that are quite large. In addition, leasing is not always the biggest alternative for tax savings on all purchases of fixed assets because it is also influenced by other factors, namely the value of the lease and the agreed option value.
The tax planning carried out by the CoRporate Taxpayer is expected to be useful for saving cash out. This is due to the tax which is an element of cost can be reduced, so that the CoRporate Taxpayer can draw up a cash budget more accurately and systematically (Andreas, 2005). For this reason, the calculation of savings comparison alone is not enough if it is not accompanied by the calculation of the ratio of cash outflows in the three alternatives. Table  10 below is a comparison of the three purchase alternatives based on cash outflows on the purchase of the three fixed assets, namely Kijang Innova, Hi Ace Commuter and chiller .

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The payment amount is the amount of cash spent in buying fixed assets. In the cash alternative, the payment amount is the acquisition cost of the fixed assets because it is assumed not through an intermediary. In alternative bank loans, the total payment is the principal installment with credit interest costs. In the alternative leasing , the payment amount represents the down payment for the lease , principal installments, interest costs, execution costs and provision fees. Cash outflow is a reduction in the number of payments with tax savings. In the table it can be seen that the alternative that has the lowest cash outflow is the cash alternative. That is because the cash spent to obtain only the value of fixed assets, without added to the cost of interest and other costs. The alternative that has the highest cash flow is bank credit. That is because there is a fairly high interest rate but the tax savings that occur are not large enough.
The results of the analysis and discussion in this study indicate that tax savings are influenced by several factors that cause the biggest tax savings not always be caused by alternative leasing . These factors are the amount of the lease interest rate used, the lease advance, the value of the lease and the value of the agreed option, as well as the execution costs and the provision fees. However, the existence of a leasing interest rate that is lower than the loan interest rate does not cause savings that occur in bank credit alternatives to be higher than leasing . On the other hand, the highest saving cash outflow lies in the cash alternative caused by the absence of interest costs and other costs that must be paid on this alternative.

Conclusion:-
The analysis and discussion that has been described shows that the most profitable alternative in purchasing two of the three fixed assets is alternative leasing with option rights. The difference in the biggest tax savings is influenced by several factors that cause the biggest tax savings not always be caused by alternative leasing . These factors are the amount of the lease interest rate used, the lease advance , the value of the lease and the value of the agreed option, as well as the execution costs and the provision fees. However, the existence of a leasing interest rate that is lower than the loan interest rate does not cause savings that occur in bank credit alternatives to be higher than leasing. It is necessary to calculate the ratio of cash outflows from the three alternatives, apart from the aspect of income tax savings. The comparison result of the lowest cash outflow is a cash alternative. That is because the cash spent to obtain only the value of fixed assets, without added to the cost of interest and other costs. The alternative that has the highest cash flow is bank credit. That is because there is a fairly high interest rate but the tax savings that occur are not large enough.
The calculation of the ratio of tax and cash outflows, HMS is expected to be able to choose an alternative purchase according to their needs. This research suggests that HMS uses leasing because in addition to saving tax, cash outflows are not as big as alternative credit, besides the funds owned by HMS can be used for other puRposes, so that cash can be used effectively and efficiently.