Govt introduces amnesty in revised draft tax laws

Govt introduces amnesty in revised draft tax laws

Rendi A. Witular, The Jakarta Post, Jakarta

To encourage tax evaders to start paying their taxes -- in return
for immunity from penalty and prosecution -- the government has
provided a tax amnesty in its recently completed draft revisions
of the tax laws.

In the draft revision for law on general taxation arrangements
and procedures, the government will allow taxpayers to revise
their tax statements and report their real earnings starting from
the 2001 fiscal year until 2005.

If taxpayers accept the offer, the government will reduce or
eliminate entirely all administrative penalties, as well as
dropping any criminal charges.

"We are providing a kind of an initial tax amnesty facility
for recalcitrant taxpayers in order to the expand taxpayer base
as well as reap more tax revenue," Robert Pakpahan, a member of
the tax laws revision team at the Ministry of Finance's
Directorate General of Taxation, told The Jakarta Post on
Tuesday.

He said, however, that the amnesty would be valid only during
the first year of the implementation of the new tax law, which is
scheduled to take effect next year.

"It is better for the government to try to collect the unpaid
taxes by reducing or abolishing penalties against taxpayers
rather than getting nothing from them," said Robert, adding that
the offer would cover unpaid income taxes, value added taxes,
luxury taxes and land and building taxes.

The deal is also good for individual as well as corporate and
institutional taxpayers.

Details of the tax amnesty scheme will be outlined in a
ministerial regulation.

Indonesia has a self-assessment tax system in which taxpayers
are given the authority to state their own tax filings, with the
tax office later cross-checking the filings.

The tax amnesty is meant to encourage people and enterprises
to register as taxpayers without fear of prosecution for past tax
debts.

As reported earlier, the Directorate General of Taxation
recently completed the revision of Law No. 16/2000 on general
taxation arrangements and procedures, Law No. 17/2000 on income
tax and Law No. 18/2000 on VAT and luxury tax.

The revisions, the third major tax reform since 1983, will be
submitted to the House of Representatives next month for
deliberation.

The head of the tax law revision team, I Made Gde Erata, told
the Post the government was still completing the draft of a
special, separate law on tax amnesty.

That law would contain a wider tax amnesty mechanism that
would cover all the way back to the 1980s.

"The facility in the upcoming laws is just an introduction for
a wider and more comprehensive tax amnesty law that we are still
preparing," said Erata.

He acknowledged that during the first year of the offer, there
could be a potential loss of tax revenue. However, this loss
would be made up for in the long run with a wider taxpayer base.

Many believe the amnesty is primarily aimed at luring back
billions of dollars parked overseas by Indonesian conglomerates
in the aftermath of the economic crisis to avoid paying taxes.

It is hopes these funds will revive the real sector and
eventually absorb some of the unemployed. In addition, they would
help the government reap more tax revenue from a vibrant
corporate sector.