51 companies face trial for alleged tax fraud
51 companies face trial for alleged tax fraud
JAKARTA (JP): The government will take 51 trading companies to
court for allegedly manipulating the 10 percent value added tax.
Tax Director General Fuad Bawazier alleged here yesterday that
the 51 companies, based in Jakarta, Tangerang and Bekasi,
manipulated value added tax invoices to get larger refunds from
the government.
Fuad refused to disclose the estimated tax revenue losses of
what he called one of the biggest tax frauds uncovered by his
office.
"The financial losses resulting from the tax manipulation is
great enough," he said after submitting dossiers on the 51
companies to Deputy Attorney General for Special Crime Yunan
Sawidji.
The trading companies, with gross sales of at least Rp 240
million (US$109,000), are required to register for a taxable firm
status at the Tax Director General's Office. Smaller companies,
of their own will, can also elect the same status, which allows
them to collect the 10 percent value added tax from their
customers.
The value added taxes collected by the companies, under the
existing mechanism, can be credited against the similar taxes
already paid to their wholesalers.
If the amount of the taxes they pay is higher than what is
collected they are allowed to have the difference refunded.
"However, in the process, many taxable companies have
manipulated the tax invoices to inflate the balance between what
they have paid and the amount they have collected," Fuad
explained.
He said that some of the 51 companies were guilty of using
false names and false addresses to fool tax officials.
The Deputy Attorney General Yunan said that his office, in
cooperation with tax officials, would soon establish a team to
investigate the Tax Directorate General's findings.
If the 51 companies are found guilty of violating the Anti-
Corruption Law No. 3/1071, Yunan said they could face the maximum
sentence of life in prison.
Penalty
As an initial penalty, Fuad's office has revoked the
privileges of the 51 companies as taxable companies, thereby
suspending their rights to collect the value added tax from their
customers.
"The penalty is important to protect the public," he added.
Fuad did not rule out the possible involvement of tax
officials, saying that it is up to the Attorney General's Office
to probe any possibilities of collusion between tax officials and
businessmen.
According tax office sources, the government has thus far
discovered 3,000 instances of valued added tax manipulation,
causing financial losses to the state of around Rp 150 billion
per year.
Between January and May 1993 alone, the government uncovered
39 cases of value added tax cases, causing a loss of
approximately Rp 30 billion to the state.
Investigation
As many as 27 of the cases have been submitted to the Attorney
General's Office while the remaining 12 have been submitted to
the police for further investigation.
A number of tax fraud cases have been taken to court but many
offenders were acquitted for a lack of evidence.
One of the most controversial cases of tax manipulation took
place in Surabaya, East Java, early last year when the local
court cleared two businessmen of tax manipulation charges. The
frauds were estimated to have caused approximately Rp 5.1 billion
in lost tax revenues.
Disappointment with the acquittal of the two businessmen was
voiced not only by tax officials but by President Soeharto
himself.(imn/hen)