Fri, 30 Mar 2007
From: The Jakarta Post
By Ary Hermawan, The Jakarta Post, Jakarta
Coordinating Minister for the Economy Boediono said Thursday he was upbeat that a much-awaited new package of tax legislation could be passed into law this year, despite the prolonged debate.

"We're optimistic (that the deliberations can be completed this year), as this is necessary for all our sakes," Boediono said at his office.

The new taxation package, which involves the amendment of the 2000 General Taxation Arrangements and Procedures Law, the 2000 Income Tax Law and the 2000 Value-added Tax and Luxury Sales Tax Law, was submitted to the House late in 2005.

On Wednesday evening, the working committee tasked with deliberating the contentious articles of the general taxation arrangements and procedures amendment bill, which serves as the basis for the other two bills, failed to reach agreement on several crucial articles.

The impasse has was again delayed the deliberation of the bill, which was originally scheduled to be passed by the end of 2006 and to have entered into effect on January 1.

Andi Rahmat of the Prosperous Justice Party said the government and lawmakers were still at odds over Article 25 on the procedures for filing tax objections to tax assessments.

The government had initially proposed in the bill that a taxpayer should first make a minimum payment agreed on with the tax service before filing an objection.

Should the objection be rejected, he would then be hit with a fine amounting to 100 percent of the agreed amount of tax that he should have paid. The fine rises to 200 percent should he lose on appeal.

The proposal was rejected by the lawmakers, with those from the National Mandate Party faction, the Prosperous Justice Party faction and the Golkar Party faction being particularly opposed. The government then proposed reducing the fine to 50 percent at the objection stage and 100 percent on appeal. But this was also rejected again, further delaying the passage of the bills, which were to have been enacted prior to the House's one-month recess, which starts on March 31.

Andi said the committee would begin its discussions on the issue once again after the recess in mid May, as well as its deliberations on the proposed establishment of an independent revenue agency and a taxation supervisory commission.

Indonesian Chamber of Commerce and Industry (Kadin) chairman M. S. Hidayat said the government should be more flexible as the taxation bills were not only designed to increase tax revenues but also to promote investment.



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