Mon, 01 Jul 2002

Govt opens special tax office for big business groups

The Jakarta Post, Jakarta

The government is scheduled to officially open the Large Taxpayers' Office (LTO) on Monday, which is specially assigned to collect taxes from the country's top 200 businesses.

Coordinator for the LTO project Petronius Saragih said over the weekend the new tax office would not be fully operational on Monday as there were still many things to be prepared to make the office complete.

The Ministry of Finance expects the office to be fully operational in September this year.

According to Petronius, the Ministry of Finance had completed the selection of 410 workers for the new tax office, but it had yet to name the new office's head.

Furthermore, he said, the office, which has occupied space at a building, formerly owned by the Humpuss Group, on Jl. Merdeka Timur, Central Jakarta, had yet be fully furnished.

Nevertheless, Petronius assured the 200 taxpayers that they could start paying their taxes at the office on the opening day as the existing facilities were capable of supporting such activity.

"The office will be inaugurated by the Minister of Finance (Boediono). Representatives of all the 200 taxpayers have been invited to attend the ceremony, and we hope that they can pay their taxes there on the day itself," he said.

The LTO is expected to contribute around 23 percent of the government's tax earnings this year, which are targeted at Rp 184.7 trillion (about US$21.2 billion).

The government is changing its approach in making large businesses pay their taxes. While in the previous years, the largest taxpayers were hailed and given awards, starting today the taxpayers will be given the "privilege" of paying their taxes in a special office.

The launching of the LTO is part of the economic reform program agreed upon by the government and the International Monetary Fund (IMF), which has been providing billions of dollars in loans to help the country recover from the economic crisis.

The government has promised the IMF that it will implement bold measures to minimize tax evasion, broaden the tax base and clean up the corruption-infested tax directorate general by setting up the LTO, strengthening the internal audit system, launching a national tax audit and reporting system, and vigorously going after tax arrears.

Some experts have praised the establishment of the special tax office for the country's largest taxpayers, but warned that it must promote transparency to prevent tax disputes between taxpayers and tax officials particularly in "grey areas."

The gray area refers to expenditure that is often interpreted differently by taxpayers and tax officials. The expenditure includes traveling and entertainment expenses.

They also said it must be managed by clean officials, and added there must be an ombudsmen's office, comprising comprising independent people, to supervise the LTO.