British citizen imprisoned for alleged tax evasion

Rendi A. Witular, The Jakarta Post, Jakarta

The Directorate General of Taxation has sent a British citizen directly to prison without trial for alleged failure to pay tax arrears amounting to Rp 45.8 billion (US$5.38 million).

It was the second such imprisonment this month of a tax evader.

Chief warden of the notorious Cipinang penitentiary Djoko Mardjo told The Jakarta Post on Tuesday that the tax directorate had imprisoned a man named Mark Michael Greenwood for failing to pay taxes to the state.

"The tax directorate has sent in a British citizen under the name of Mark Michael Greenwood. I forgot the name of his company, but he is an executive at an oil firm in partnership with state- owned oil company PT Pertamina," said Djoko.

He said that Mr. Greenwood would share a cell with Jasman Lim, another convicted tax evader who was detained recently for failure to pay Rp 11 billion to the tax man.

The two, however, would be allowed unlimited visits from friends and family, but that required prior approval from the tax directorate, Djoko said.

According to the tax directorate, the expatriate has not paid income taxes since 1998.

Spokesman of the Ministry of Finance Maurin Sitorus told the Post that Minister of Finance Boediono had authorized the detention of the expatriate pending payment of his taxes to the state.

He explained that before issuing the decree, the minister had summoned officials from the British Embassy to help settle the problem, but to no avail.

The tax directorate, under the ministry of finance, said there were 68 other tax evaders awaiting imprisonment, including 17 expatriates.

Director General of Taxation Hadi Purnomo said that there was one other expatriate who was nearly jailed this week, but his detention was postponed after he agreed to pay 60 percent of his total tax arrears of Rp 42 billion.

Under a new regulation, the tax directorate can send tax evaders to jail without a standard court trial.

According to the regulation, the accused can file an objection with the administrative court while in detention and if he/she wins an appeal, the directorate will pay compensation of Rp 100,000 for each day of detention and publish an announcement in a domestic newspaper to restore the reputation of the person involved.

Earlier, international business lobby groups criticized the directorate's move, saying it would further undermine the country's investment climate.

They said there were other ways of bringing tax evaders to bear without using a "17th century" solution.

The tax directorate has been aggressively trying to collect tax arrears. In the first nine months of this year tax collection has increased by 38 percent to Rp 18 trillion from Rp 13 trillion in the same period of last year.

However, at the same time, corruption and collusion at the directorate, apparently in the trillions of rupiah, was still rampant, while the government has tended to turn a blind eye toward the problem, according to the business associations.