Complaints over tax laws acknowledged
Rendi A. Witular, The Jakarta Post, Jakarta
Following intense opposition from the business community over proposed amendments to the tax legislation, the government pledged on Wednesday that it would soften its stance by agreeing to significantly review them.
President Susilo Bambang Yudhoyono has instructed relevant ministers to make substantial concessions while discussing the laws with legislators in order to accommodate public demands, Coordinating Minister for the Economy Aburizal Bakrie said.
"Based on the president's decision, the government has agreed to be more accommodating in accepting input from taxpayers and by making significant changes to the (draft) amendments," he said after a ceremony at the Presidential Palace.
The government passed on the draft amendments to three tax laws to the House of Representatives for deliberation in early September in the expectation that the new bills would come into effect on Jan. 1, 2006.
The three amendment bills -- which if past will be the third series of tax legislation reforms since 1983 -- include Law No. 16/2000 on general taxation arrangements and procedures, Law No. 17/2000 on income tax and Law No. 18/2000 on value added tax and luxury tax.
Aburizal said that some of the key demands from taxpayers -- which were likely to be accommodated -- included equality between the revenue service and taxpayers.
"I think there should be an evaluation of the level of equality between taxpayers and tax officials. This is one of the main concerns of taxpayers that we need to address seriously," he said.
Both domestic and foreign taxpayers here have been worried about the widening imbalances between the power of tax officials and the rights of taxpayers.
Tax officials remain subject only to internal controls in the directorate general and the finance ministry, with officials suspected of tax crimes or violations being investigated only by their colleagues.
On the other hand, taxpayers will face heavier sentences if suspected of violating the tax laws. They will also find it difficult to stand up for their rights in dealing with the tax bureaucracy.
Aburizal said the government would also incorporate ways to simplify procedures in tax collection as well as the rebate process.
With a possible massive overhaul of the amendments, Aburizal indicated that reform of the country's tax regime could only start in 2007, one year later than expected.
The amendments, which were initially praised as "business friendly", turned out to be counterproductive after several unilateral changes were made by the Ministry of Finance minutes before they were submitted to the House.
The amendments were drafted jointly by the ministry's Directorate General of Taxation and the Indonesian Chamber of Commerce and Industry (Kadin), with the primary aim being to make the tax legislation more friendly to taxpayers.
Tax collection in Indonesia, Southeast Asia's largest economy, remains one of the lowest among major Asian economies. As of the end of last year, only 3.67 million people or institutions had a tax file number and paid taxes regularly.