Govt addresses expatriate taxation concerns

Govt addresses expatriate taxation concerns

JAKARTA (JP): The Directorate General of Taxation has insisted
that expatriates in Indonesia have to register with local tax
offices and file tax returns in line with the a new income tax
law that will come into force in January but assured them of a
smooth implementation of the ruling.

The ruling was reaffirmed by Director General of Taxation
Machfud Sidik and other senior tax officers at a meeting with tax
consultants and representatives of foreign chambers of commerce
here last week.

Tax consultants and foreign businesspeople have raised great
concerns that the new ruling on expatriate taxation might not be
conducive to wooing foreign investment in the country.

Income Tax Law No.17/200 defines foreigners who stay in
Indonesia for more than 183 days within a year as resident
taxpayers who must register with the tax office and lodge tax
returns.

The law applies five different tax rates ranging from 5 to 35
percent with the highest rate applicable to an annual income of
more than Rp 200 million (US$22,700).

One tax consultant, who attended the meeting, quoted a senior
official of the income tax directorate as saying that as his
office was under strong pressure to raise income tax receipts it
would take the enforcement of the ruling seriously.

The 2001 draft budget, which is currently under deliberation
at the House of Representatives, sets the target of income tax
revenue at Rp 93.07 trillion (US$10.5 billion) or as large as 6.6
percent of the gross domestic product.

The income tax directorate, however, assured foreign
businesspeople that it would cooperate closely with tax
consultants and foreign chambers of commerce to ensure smooth
implementation of the tax ruling.

Tax officials also assured expatriates that tax audits on
individual taxpayers would be conducted only on a selective basis
and would be limited in number, according to one tax consultant
who preferred anonymity.

"They also assured us that tax audits will be notified through
tax consultants or representatives of foreign chambers of
commerce to avoid any unreasonable demands or pressure on
individuals," the consultant said.

Taxpayers have always dreaded tax audits, claiming that tax
officials often impose arbitrary assessments and use
discretionary power to interpret tax rulings.

The consultant added that the income tax office also promised
to cooperate with tax technical specialists of foreign chambers
of commerce in the enforcement of the tax regulation, in
identifying and solving technical issues and in producing an
English version of the individual tax return form. (vin)