Crack down planned on tax evaders

Crack down planned on tax evaders

JAKARTA (JP): The government announced on Thursday it would
soon launch a massive crackdown on companies, institutions and
individuals suspected of tax crimes.

Coordinating Minister for the Economy Rizal Ramli said the
government had found preliminary evidence of tax crimes by "100
institutions and 50 wealthy individuals".

"I have asked the director general of taxation to start a
massive investigation next week," Rizal said during a joint media
conference with Attorney General Marzuki Darusman, State
Intelligence Coordinating Board (Bakin) head J. Arie Kumaat,
director general of taxation Machfud Sidik and the National
Police deputy chief.

"From now on we mean business ... So please pay your taxes in
full," Rizal said.

He declined to name the institutions and individuals suspected
of tax crimes.

The coordinating minister said Indonesia had a good tax law,
but the enforcement was weak. As proof, he said that during the
past 20 years, only 41 cases related to tax crimes had been
investigated.

"This means only five cases per year ... But I think the
incidence of tax crimes was much greater than that.

"But today will be the turning point in the enforcement of the
tax law in the country."

Director general of taxation Machfud Sidik said potential
state losses due to the suspected tax crimes committed by the 100
institutions was about Rp 4 trillion (US$439.56 million), while
for the 50 individuals this figure was some Rp 300 billion.

He said violations of the tax law were punishable by a penalty
of up to four times the amount of the taxes due, or imprisonment.

Marzuki said legal measures were more effective than
administrative penalties in ensuring compliance with the tax law.

"If there are two options, the Attorney General's Office
stresses legal sanctions ... so that the message becomes much
clearer and louder."

Marzuki said this warning also was directed at those who in
the past amassed money using a variety of methods which were
legally questionable.

Marzuki did not provide any names, but the family and
associates of former president Soeharto allegedly abused their
power to raise funds from the public and state enterprises
without paying taxes on their income.

However, many analysts see the current administration of
President Abdurrahman Wahid, the country's first democratically
elected president, as impotent in taking legal action against the
Soehartos and their cronies.

The authorities, for example, have been unable to put
Soeharto's youngest son Hutomo "Tommy" Mandala Putra in jail
after the Supreme Court sentenced him to 18 months in prison for
a land swap deal with the State Logistics Agency in 1995 and the
President refused to pardon him.

Marzuki also appealed to the public to report any tax
officials who abused their authority.

The government is under pressure to boost domestic revenue
through taxes in a bid to lower the country's dependence on
foreign loans.

The state budget over the next several years will be heavily
burdened by the huge cost of the government's bank restructuring
program, estimated to cost more than Rp 600 trillion.

Machfud said the current tax ratio (tax receipts against gross
domestic product) is 11.1 percent, a figure the government
intends to increase to 12.3 percent next year and 16.1 percent in
2004.

"We want tax revenue to increase by between 20 and 25 percent
each year.

"Without law enforcement we can't achieve this target," he
said.

Machfud said tax compliance in the country was relatively low
compared with neighboring nations.

He pointed out that of the country's more than 200 million
population, only 1.3 million people had tax identification
numbers, or NPWP, and only 600,000 entities were registered as
regular taxpayers.

He estimated potential tax revenue lost over the past 10 years
because of inadequate collection efforts and low tax compliance
at Rp 130 trillion. (rei)