Examine foreign investment firms failing to pay taxes

Examine foreign investment firms failing to pay taxes

It is reported that 3,500 out of 4,850 companies set up under the foreign investment scheme have, for a variety of reasons, failed to pay taxes, inflicting losses on the state totaling trillions of rupiah. This is a serious case especially because the government has made tax receipts the pillar of its revenues for the 2003 state budget. For example, tax receipts make up 73 percent of the state's spending.

In its efforts to reach the target of tax receipts, the government has not only raised tax tariffs but has also widened the variety of taxable goods and services, acts that will eventually generate a greater burden on the people.

Therefore, media reports that 70 percent of foreign-investment companies are yet to pay their taxes hurts the public's sense of fairness, especially when it was later said that many of them were involved in transfer pricing to engineer their financial statements so that it looks as if they sustained losses and were exempted from paying taxes.

It is very clear these foreign-investment companies have violated our laws and this cannot be tolerated. We must uncover their transfer pricing practices though it seems like a Herculean task.

The directorate general of taxation must never lose heart in tracing and examining these cases. Efforts must be made to ensure that foreign-investment companies comply with their tax obligations. In this way, the budget deficit can be bridged.

-- Suara Karya, Jakarta