Income taxes from foreigners exceed the 2001 target
Income taxes from foreigners exceed the 2001 target
JAKARTA (JP): Income tax collected from foreigners from
January to March has exceeded the government's target for this
year, with Jakarta's expatriates contributing some Rp 63 billion
(about US$5.94 million) from an original target of Rp 55 billion
for the entire year (2001).
The head of the income tax office for foreigners at the
directorate general of tax, John Hutagaol, said that income tax
receipts from expatriates in Jakarta during the January to March
period represented a more than 200 percent increase on those
received last year.
"There has been an enormous jump in tax collection since we
started our new tax campaign for foreigners last year," John told
reporters following the launching of a taxation manual for
expatriates in Indonesia.
He said that beginning this year, the income tax office for
foreigners only monitored expatriates in Jakarta. Tax offices in
other regions now combined handling foreigners' tax payments with
local ones.
John said that, as most tax revenues come from Jakarta's
expatriates, the government didn't have a target or possess data
on tax potentials of foreigners residing outside Jakarta.
He attributed the boost in tax collection mainly on the
government's aggressive move to tax foreigners' income.
He also didn't rule out that a recently passed law to tax
expatriates' overseas earnings had also helped boost tax
collection, though he was unable to say by how much.
Because of the higher-than-expected tax revenue, John said his
office was adjusting its tax collection target, and might set it
at over Rp 120 billion for this year.
"We're expecting additional monthly tax installments of about
Rp 7 billion over the remaining nine months of this year," he
said.
The bulk of this year's taxes were collected in March, when
foreigners paid annual tax installments amounting to Rp 52.5
billion.
Taxpayers can choose between paying their annual income tax in
one payment or in monthly installments.
The surge in foreigners' income tax revenue comes amid
warnings that a new regulation to tax their overseas' earnings
could impede foreign investment.
Under last year's amended tax law, foreigners working or
living in Indonesia for more than 183 days in a 12-month period
must report all their income, including that of overseas income
to the local tax authorities.
John said that Indonesia had signed tax treaties with 47
countries, mostly developed countries, to exchange information on
the income of their citizens.
"They (foreign tax authorities) are very open and transparent
when it comes to seeking data on expatriates' overseas income,"
he added.
The lack of data, however, made it difficult to assess tax
potentials of foreigners working here, he said.
According to him, many locally run businesses were in fact
controlled by foreigners, who tried avoiding tax and the
immigration authorities.
"We have, for example, many restaurants here whose owners
transpire to be foreigners," he explained.
But according to him, the expatriate's sense of duty to pay
taxes has grown since the government tried to make tax payment
easier for them.
Starting last year, he said his office had changed its
approach in taxing foreigners.
The government focused only on Jakarta expatriates, leaving
out tax revenues from expatriates in other regions, he said.
John said his office is also seeking a friendlier approach, by
treating foreigners as customers.
Directorate general for tax Hadi Poernomo said that with the
launching of the taxation manual for foreigners, they would no
longer have the excuse that they didn't understand the
regulations.
His office is facing a tight tax revenue target of around Rp
180 trillion in this year's state budget.
Hadi said that delay in several taxes, such as on agricultural
products might throw back the tax revenue target by Rp 9
trillion.
More pressure has arisen as worries surfaced that the state
deficit would grow by 5 percent of gross domestic product as
compared to an initial estimate of 3.7 percent.(bkm)