Government starts crackdown on tax evaders<\/p>\n
JAKARTA (JP): The government set into motion on Wednesday
\ntheir promise of cracking down on tax crime by announcing two
\nwealthy individuals who allegedly evaded taxes, causing a loss of
\nabout Rp 1 trillion (US$107 million) to the state.<\/p>\n
Coordinating Minister for the Economy Rizal Ramli said the two
\nalleged tax evaders, with the initials \"ST\" and \"DD,\" were among
\nsome 100 institutions and 50 individuals who are being
\ninvestigated by the tax office for not reporting their taxes
\ncorrectly under the country's self-assessment tax system.<\/p>\n
\"The government from now on will take strong action against
\ntax crime,\" Rizal told a news conference. \"We want the rich to
\npay their taxes.\"<\/p>\n
He declined to disclose the full names of the suspects as it
\nwould be in violation of the tax law, but he said their names
\nwould be made known to the public once their trial starts.<\/p>\n
He said convicted tax evaders risk a maximum sentence of six
\nyears in prison and a penalty of four times the amount of the
\nunpaid taxes.<\/p>\n
Director General of Tax Mahfud Sidik said the two alleged tax
\nevaders had purchased shares and made investments both overseas
\nand domestically worth billions of rupiah, and they also held a
\nposition as commissioner in several local and overseas companies.<\/p>\n
\"(But) their ability to purchase shares and make huge
\ninvestment was not proportional to the income they reported in
\ntheir tax returns, so it can be presumed that (they) did not
\nreport their (true) income,\" Mahfud said.<\/p>\n
Rizal said the current administration would be serious in the
\nenforcement of the country's tax laws.<\/p>\n
He said that during the past 20 years, the enforcement of tax
\nevasion had not been effective.<\/p>\n
He said tax revenue was crucial for the economy because the
\ngovernment was determined to lower the budget deficit and foreign
\nloans.<\/p>\n
Rizal also said full enforcement of the tax law could be
\nuseful in prosecuting bad businessmen who have so far been able
\nto escape the law.<\/p>\n
He pointed out that Al Capone, a notorious American criminal
\nin the 1950s, could only be sent to jail because of a tax
\nviolation.<\/p>\n
Rizal has been facing challenges in forcing the top
\nconglomerates to repay their huge debts to the government.<\/p>\n
Rizal said the losses to the state due to suspected tax crimes
\ncommitted by the 100 institutions and 50 individuals could reach
\nmore than Rp 4.3 trillion.<\/p>\n
The state budget over the next few years will continue to be
\nheavily burdened with the cost of the government bank
\nrestructuring and recapitalization program.<\/p>\n
The government intends to increase the current tax ratio (tax
\nreceipts against gross domestic product) of 11.1 percent to 12.3
\npercent next year and 16.1 percent in 2004.<\/p>\n
Tax officials have said without serious law enforcement, the
\ntargets would not be achieved.<\/p>\n
Out of the country's population (more than 200 million), only
\n1.3 million people have tax identification numbers (NPWP) and
\nonly 600,000 legal entities have been registered as regular
\ntaxpayers.<\/p>\n
The possible tax revenue loss over the past 10 years from
\ninadequate collection efforts and low tax compliance reached Rp
\n130 trillion, the government has estimated.<\/p>\n
Under the country's tax ruling, an annual income of up to Rp
\n25 million is subject to 5 percent tax, between Rp 25 million and
\nRp 50 million is subject to 10 percent tax, between Rp 50 million
\nand Rp 100 million 15 percent tax, between Rp 100 million and Rp
\n200 million 25 percent tax and above Rp 200 million is subject to
\n35 percent tax.<\/p>\n
The government earlier formed a joint team, including
\nofficials from the tax office, the Attorney General's Office, the
\nintelligence agency and the police, to help resolve the tax crime
\nproblem.<\/p>\n
Separately, Attorney General Marzuki Darusman said on
\nWednesday that the list of people suspected of evading taxes came
\nfrom various professions and economic classes and were mostly
\nstate officials, businessmen, lawyers and artists.<\/p>\n
\"During the investigation, we found that their annual tax
\nreports were way below the level of their living standards and
\ntheir way of life which can bee seen by the public,\" Marzuki
\nsaid. (rei\/bby)<\/p>",
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