Businessman hailed for tax office suit

Rendi A. Witular, The Jakarta Post, Jakarta

A corruption watchdog and several businessmen have agreed to jointly support a local businessman who has recently launched an all-out legal battle against the tax office over alleged extortion.

Chairman of the Indonesian Corruption Watch (ICW) Teten Masduki praised the effort by businessmen to fight corrupt practices at the tax office, since many businessmen have actually gained benefits from colluding with tax officials.

"This is a breakthrough. Corrupt practices at the tax office are hard to prove because businessmen are often involved and gain benefits from the practices. Therefore, they don't bother to report or disclose them," said Teten on Wednesday.

Teten was commenting on an attempt by health equipment supplier PT Apota Wibawa Pratama to file a case with the Constitutional Court to review the legality of the tax tribunal, which it said had become a tool for extorting taxpayers.

The Court has recently accepted the petition, and will summon those involved in the drafting of the tax court law, including Minister of Finance Boediono, and a number of legislators from the House of Representatives.

The tax court would have to be abolished if the Constitutional Court overturned the law.

The company has also filed an objection with the East Jakarta Administrative Court over the size of its tax assessment. It is also planning to report officials from the Mampang Prapatan tax office in East Jakarta to the police for extortion.

Teten said ICW would support the company once it reported the case to the police. "ICW will try to supervise the police investigation and pressure the police to solve the case," he said.

PT Apota has fallen victim to what it describes as "unscrupulous behavior" on the part of tax officials, who inflate the amount of tax arrears owed by a company in order to discourage it from going to the tax tribunal to complain, and to ask for a bribe instead.

A taxpayer has to pay 50 percent of its total tax bill before filing an objection with the tax court. The high cost of filing objections with the court has caused some businesspeople to prefer bribing tax officials.

Elsewhere, the legal battle launched by PT Apota has encouraged several businessmen to follow suit. A businessman, Widodo Latip, said he would join hands with PT Apota in fighting the tax office by filing a similar petition, or by supporting the company in court.

Widodo explained that he had become the victim of corrupt practices by tax officials, who took advantage of the situation caused by the 1998 riots in Jakarta, during which fire gutted his company's office building. All of the company's documents on assets, sales and taxes had been destroyed in the fire.

He said that after the company was dissolved due to the riots, the Palmerah tax office in West Jakarta suddenly came to him with an irrational tax bill totaling around Rp 8 billion (US$9.4 million).

The company, which used to supply steel products under initial PT LMS, could not file its objection with the tax tribunal because it could not come up with 50 percent of the tax arrears.

Widodo's assets have been seized to cover the arrears. He is currently at risk of being detained by the tax office as his assets cannot entirely cover the arrears.

Chairman of the Indonesian Economic Recovery Committee (KPEN) Sofjan Wanandi said that businessmen should file their cases with the committee and other business lobby groups to obtain full support to fight the corrupt tax office.