Tue, 05 Aug 2003

Five hotels reported to tax arrears

Bambang Nurbianto, The Jakarta Post, Jakarta

Stepping up its move against tax evaders, the Jakarta administration has reported five hotels to the Jakarta Prosecutor's Office for failing to clear their tax arrears.

However, the administration has yet to decide if it will seize the hotels or ask the hotel management to be "held hostage" for evading tax.

Head of the City Revenue Agency Deden Supriadi said on Monday that the five hotel managements had been reported to the prosecutors office in mid-July after his agency did not see any goodwill from them.

"Only tax evaders that refused to cooperate would be reported to the prosecutors office," Deden told the media before attending a plenary session at the City Council on the revision of the city budget.

He named only three of the five hotels -- Sahid Jaya, Omni Batavia and Park Plaza.

The agency announced earlier that Sahid Jaya's tax arrears totaled Rp 13.27 billion (US$1.56 million), Park Plaza's Rp 2.37 billion and Omni Batavia's Rp 1.62 billion.

None of the three hotel managements were available for comment.

The hotels were among dozens of tax evaders, including hotels, restaurants, entertainment centers and outdoor advertisement firms, whose total tax arrears amounted to around Rp 58.5 billion.

The agency has issued 70 distress orders to the tax evaders but has so far collected only Rp 3.5 billion from the companies.

Deden said that apart from reporting the tax evaders to the prosecutors office, he would also continue his previous move of issuing distress orders against the tax evaders who refused to cooperate with his agency.

Asked why he had not issued seizure orders against the tax evaders, he argued that the 70 tax evaders that had been given distress warrants had begun paying their arrears in installments.

Based on Law No. 19/2000 on the enforced collection of taxes, the agency is authorized to compel tax evaders to pay their arrears or face seizure of their assets.

Many criticized that tax evasion often occurred because of collusion between taxpayers and officials at the agency.

Last year, the administration asked the Central Jakarta District Court to seize Hotel Mulia Senayan, Central Jakarta, but the court annulled the seizure as the hotel started to repay its debt to the administration, which amounted to Rp 15 billion.

The central government announced earlier that it planned to place tax evaders in detention.

Government regulation No. 137/2000, which came into effect early in 2001, gives the tax office authority to detain tax evaders.

Three blocks, consisting of three to five cells at Cipinang prison, East Jakarta, have been made ready to hold tax evaders until they agree to pay their obligations to the state.

Similar preparations have also been made at Salemba penitentiary, Central Jakarta, for tax evaders in the city.