Businesses lobby House on tax amnesty, reform

Leony Aurora, The Jakarta Post, Jakarta

Businessmen are asking the House of Representatives to take the initiative in drafting two bills on tax amnesty and tax court proceedings as part of an overall tax reform package aimed at boosting tax revenue.

Sofyan Wanandi, the chairman of the Indonesian Employers Association (Apindo), said in a hearing on Tuesday with House of Representatives Commission IX, which oversees financial affairs, that the two rulings were needed to complement the package of three bills on tax revision currently being prepared by the government.

The hearing was also attended by a number of other businessmen.

The Ministry of Finance is conducting an internal review on the amendments of laws on general taxation arrangements and procedures, income tax, as well as luxury and value-added taxes.

"We need to have an amnesty once and for all, so that more people can pay taxes," he said, pointing out that many people were afraid to pay taxes because it might mean that the tax office would also go after them for their past unpaid taxes.

Sofyan, who is also the chairman of the National Economic Recovery Committee (KPEN), further outlined the need for reform in the tax court proceedings law. "(Currently) if we want to go to the tax court (to settle a tax dispute), we have to pay a 50 percent down payment," he said.

The down payment is calculated not based on the amount of tax in dispute, but on whatever the officials see fit, he said. "Let's say the dispute is for Rp 1 billion (US$117,647), the tax officers may ask for Rp 10 billion (as the standard) and then we have to pay Rp 5 billion as a down payment."

As a result, said Sofyan, the cash flow for companies was severely disrupted.

According to Apindo, over 4,000 tax disputes have been rejected by the tax court because the businessmen could not afford the down payments.

Commenting on these issues, Paskah Suzetta, deputy chairman of Commission IX, said that there were three things to be done regarding tax reform, namely tariff rationalization, tax administration reform and tax amnesty -- in that order.

Tax amnesty, he said, had to be the last step. "Otherwise, a moral hazard might occur among taxpayers".

As for the court proceedings, Paskah said that the House would first observe the government's drafts.

"If they (court proceedings) are not regulated there and the public wishes them to be included, the House will take the initiative," he said.

The businessmen also brought up their objections on the government's bills, notably on the lack of equality between taxpayers and officials.

Taxpayers were subject to various sanctions, whereas corrupt tax officials were subject to none, they said.

Commission IX accepted the suggestions and said that they would discuss them further after the government officially submitted the drafts.

"The tax drafts will be a priority because they concern investment appeal and government revenue," said Paskah after the hearing.

The revision to the current tax laws is intended to achieve a higher tax revenue. The government aims at generating Rp 234 trillion in tax revenue this year, contributing nearly 80 percent to the state budget.

The government was scheduled to finish the bills by the end of January but recently announced that the bills would only be completed this month.