Govt to put forward tax law revisions soon

Rendi A. Witular, The Jakarta Post, Wellington

The government is to put forward draft revisions on tax, excise and customs laws to the House of Representatives this semester, as part of a scheme to revitalize the nation's taxation system, thereby bolstering the corporate sector and reducing the high- cost economy.

According to Minister of Finance Yusuf Anwar, the government would most likely submit four draft revisions to tax laws, which would include laws on tax procedures, value added tax, income tax and a tax amnesty.

In addition, the government would also submit draft revisions to the excise law as well as on customs laws.

"To help strengthen our private sector so that it can absorb manpower and make products that are more competitive overseas, the government is now trying to speed up revisions to laws on the fiscal front," he said during a visit with President Susilo Bambang Yudhoyono to New Zealand on Thursday.

Yusuf said his ministry was still discussing the revisions, with tax rates still a subject of extensive debate, as the government would seek rates that would serve the interests of both the state and the business community.

"I am still not satisfied with the new tax rate proposal. Although we are going to give the business community several incentives, we have to be careful not to jeopardize fiscal stability," he said.

Another tricky issue would center on the drafting of the tax amnesty law, which he said had the potential to encourage abuses of state funds unless there was strict supervision of the process.

The facility, which would allow past tax evaders to pay their tax debts at discounted rates, has long been requested by Indonesia's powerful business lobby, the Indonesian Chamber of Commerce and Industry (Kadin).

"We can not confirm as yet whether we can go ahead with the tax amnesty law because there are several problems that still have to be settled, including issues of moral hazard, amnesty rate and scope," said Yusuf.

In order to reduce the risks resulting from the amnesty, he said the ministry had sent a team to South Africa -- which has applied such policy -- to study their system and find ways to prevent the amnesty from being abused by recalcitrant taxpayers.

Meanwhile, regarding the draft revision to customs and excise laws, the ministry would propose to the House, among other things, harsher penalties for smugglers. It would also widen the definition of smuggling to help curb rampant illegal practices that have long distorted the domestic market and caused losses to the state worth trillions of rupiah.