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)