Govt promises VAT refunds in 10 days

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)