Controversial article in tax law dropped

Controversial article in tax law dropped

The Jakarta Post, Jakarta

The government has finally revoked a controversial article in
a draft revision to the country's tax legislation, which gives
the tax office greater powers to detain violators, following
protests from government agencies and business leaders.

Robert Pakhpahan, a member of the tax reform team at the
Directorate General of Taxation, told The Jakarta Post on Tuesday
that the directorate had decided to drop the article for fear
that it would hurt business confidence.

The Directorate General of Taxation, which falls under the
auspices of the Ministry of Finance, has drafted amendments to
three tax laws: 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 on goods and services and luxury sales tax.

The directorate has included several articles in the amendment
to Law No. 16/2000 that will confer greater authority on the tax
office to detain major tax evaders without trial and impose
stronger sanctions on a range of lesser violations.

Under the draft law, a tax official assigned to investigate a
tax crime will have special powers -- similar to those of the
police -- to arrest and detain people suspected of committing tax
crimes.

Moreover, the directorate will also have direct, full
authority to investigate a tax crime without consulting the
police -- the way the current system works, but which has been
deemed ineffective.

However, business leaders and economists have criticized the
drafts, saying they contain many loopholes that would allow for
corruption and misuse of power.