Experts warn of abuse in tax policy

The Jakarta Post, Jakarta

Experts said the move by the Directorate General of Taxation in detaining tax evaders without prior trial could further nurture extortion and collusion as it could be abused by unscrupulous tax officials to intimidate taxpayers.

They said that the government had also to move as strongly against corrupt tax officials as it did against bad debtors who owed a large amount of money to the state.

Businessman Sofjan Wanandi told The Jakarta Post on Thursday that the policy should be closely supervised, as there were several indications lately that tax officials had been using the "weapon" also to intimidate cooperative taxpayers.

"There have been several complaints from businessmen that tax officials have recently started threatening them by taking advantage of such a policy," said Sofjan.

Sofjan, who is also the chairman of the National Economic Recovery Committee (KPEN), was commenting on the government's recent move in sending tax evaders to jail for a maximum of one year without trial.

Thus far, two tax evaders have been jailed, local businessman Jasman Lim and Briton Mark Michael Greenwood.

Jasman was jailed for alleged nonpayment of tax on his company, amounting in total to Rp 11 billion (US$1.29 million), while Greenwood's arrears were Rp 45.8 billion.

Sofjan explained that several business lobby groups had proposed to the government an "equal treatment policy" in the revision of the Tax Procedure Law between tax officials and taxpayers, because recently the tax directorate had become a "powerful" agency.

"We have proposed such policy to be included in the draft law, but the tax directorate has refused to accept it. They still want to make the regulation, execute it and, at the same time, become the judge," said Sofjan.

He explained that with "equal treatment policy", corrupt tax officials could be jailed without trial, similar to that imposed on tax evaders.

Legal expert Todung Mulya Lubis said the detention of recalcitrant taxpayers without trial, or what is technically known as gijzelling in the Dutch and Indonesian legal systems, was lawful as it was permitted under Law No. 19/2000 on taxation.

"I support the move as long as it is used properly, but similar treatment should also be meted out to debtors who owe a debt to the state in the form of BLBI," said Todung, referring to the Bank Indonesia loan facility channeled to troubled banks during the late 1990s financial crisis, but mostly misused, according to audits.

He said that the gijzelling move could be used as part of efforts to stop widespread corruption and collusion in the country among government officials and their cronies.

Meanwhile, former head of the tax collection division at the Directorate General of Taxation Djangkung Sudjawardi said the government would not release the detained tax evaders until they had paid 50 percent of their tax arrears.

Although he left his post a month ago, Djangkung is still the official in charge for tax arrears problems.

Djangkung said that there were concerns from an embassy whose citizen was detained recently because of tax evasion; however, the government would stick to its stance of complying with existing regulations.

He said that before issuing the decree, the government had summoned officials from the embassy to inform them of the problem as well as to find ways to resolve it, but to no avail.