The Finance Ministry’s Directorate General of Taxation plans to launch a worldwide tender between September and early 2010 for a $145 million project to revamp its computerized information system, in line with concerted efforts in recent years to expand the country’s extremely low taxpayer base, a senior government official said on Tuesday.
The Indonesian Tax Administration Reform Project (Pintar) is intended to bring the tax service’s 330 offices across the country online as part of the second phase of the ongoing tax reform process.
The first phase concluded with the expiry earlier this year of the “Sunset Policy,” a limited tax amnesty.
The World Bank is backing the project with $110 million in loans, as well as a number of small grants that will be disbursed over five years. The rest of the project will be funded by the ministry.
After the project has been completed, taxpayers will be provided with individual accounts allowing them to check their tax details online, as well as improve the tax service’s ability to monitor taxpayer compliance.
Robert Pakpahan, the tax service’s director of business process transformation, said that Ernst & Young, which has been designing the Pintar system, was preparing the tender documents for the project.
“We expect the tender documents to be ready by the end of June,” he said. “Once ready, we will announce the international tender at some point between June and September. We hope to evaluate the bids between September and February, and should be ready to sign the contract by March of next year.”
Technology consulting firms such as Accenture and Oracle have shown interest in the project, he said. “We still don’t know who will get the contract, but it will have to be a firm with global expertise,” Pakpahan said.
On Tuesday, Finance Minister Sri Mulyani Indrawati said the tax-reform process would continue even though Darmin Nasution, the current director general of taxes, is due to step down next month to take up a new post as the senior deputy governor of Bank Indonesia.
“Whoever replaces Darmin will continue these reforms,” Sri Mulyani said. “I believe that the spirit of reform has deep roots in this office.”
Darmin played a major role in advancing the first phase of the reform process, which was launched in 2002, by increasing the number of registered taxpayers from 3.2 million in 2002 to 14.48 million in May this year.
Tax receipts also increased dramatically over the same period, surging from Rp 176.2 trillion ($17 billion) in 2002 to Rp 571.1 trillion in 2008.
Darmin is widely reported to have wielded an iron fist during his term at the tax service, with the result that discipline and ethics have improved considerably, although critics say much remains to be done.
Sri Mulyani, however, warned that the loans would have to be used productively to avoid sparking taxpayer outrage.
“Keep in mind that the funding for these reforms consists not only of grants, but also loans,” she said. “Should we fail to make the best of it, we will end up being demonized.”