Complaints over tax laws acknowledged

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.