Govt promises VAT refunds in 10 days

JAKARTA (JP): Director General of Taxation Fuad Bawazier promised yesterday his office would process value added tax (VAT) refunds for export-oriented firms in 10 days of exporters filing their tax refund invoices.

Fuad said yesterday delays in VAT refunds were mainly because of exporters' negligence in filling out tax invoices.

"So, please inform exporters to fill out the invoices correctly if they want a quick processing of their VAT refunds," Fuad said.

He also promised to give priority to exporters which had special status from the Ministry of Industry and Trade.

Those exporters can directly deduct their other tax obligations from their VAT refunds.

But Fuad rejected accusations his office had slowed down the processing of VAT refunds. He said his office had just taken extra caution over possible fraud.

The tax office had disbursed Rp 2 trillion (US$840 million) in VAT refunds during this fiscal year's first nine months. It plans to disburse Rp 500 billion more this fiscal year.

"If you look at that number you can see that we have disbursed a lot of money in VAT refunds. So, it's not true that we have slowed down the VAT refunding process. Anyway, we have to be cautious because that's the people's money," Fuad said.

He acknowledged his office was still in arrears for the disbursement of VAT refunds. The refund backlog reached Rp 702.26 billion.

He said he had instructed tax officials to settle the refund backlog by the end of the fiscal year.

Exporters are exempt from duties and VAT on materials imported for the production of export goods. Because they are required to pay duties and VAT on materials upon their arrival -- if they are not processed in a bonded zone -- they are entitled to a refund on the duties and VAT they have paid.

The tax office is responsible for the VAT refunds and the Directorate General of Customs and Excise for the duties refunds.

Companies registered at the Export Service Facilitating Agency get both VAT and duties refunds from the agency.

About 2,000 exporters are registered with the agency. Their exports account for 35 percent of Indonesia's non-oil exports.

Minister of Finance Mar'ie Muhammad ordered last week the Directorate General of Taxation to accelerate the processing of VAT refunds for exporters.

He said many exporters had complained about the slow processing of VAT and import duty refunds because it was affecting their cash flows.

Speedy VAT refunds would improve exporters' cash flows enabling them to strengthen their working capital or even expand their export production capacity.

Mar'ie said the slow processing of VAT refunds was because of the tax office's extreme caution over possible abuse by exporters.

He said rather than slowing down VAT refunds for all exporters, the tax office should take legal action against those trying to embezzle state funds through VAT refund facility by falsifying tax invoices.

But Fuad defended his office's caution and said it was justified because there had been many fictitious VAT refund cases.

"We should be careful in assessing a company's refunds demand. If not, much of state funds could be embezzled by criminals. It's quite easy for them to demand more than they had paid," Fuad said.

During the first nine months of this fiscal year the directorate general of taxes had submitted dozens of fictitious VAT refund cases, worth more than Rp 161 billion, to the Attorney General's Office.

"That's a large amount of money," Fuad said. (rid)