The Indonesian Chamber of Commerce and Industry (Kadin) urges the government to separate the tax office from tax regulatory authorities and to examine tax complaints so as to improve the country’s taxation system.
Kadin deputy chairman on monetary and fiscal affairs Hariyadi Sukamdani said in a press conference that the tax office has too much power, including control of regulatory frameworks, and should focus on collecting taxes and ensuring compliance.
“There should be an agency under the Finance Ministry to take care of tax complaints,” he said. Hariyadi alleged that despite administrative reform within the tax office since 2007, there had been “abuses of power” during tax audits by tax auditors, that had put some taxpayers at a “disadvantage”.
The finance ministry is raking through the tax office over a suspected network of officials who allegedly have colluded with tax tribunal officers in brokering illegal deals in tax disputes..
The move came after a staff member at the tax office objection assessment unit, Gayus Tambunan, was found to possess Rp 28 billion (US$3.08 million) that he amassed in less than a year, prompting allegations he had been taking bribes from people who had filed tax complaints.
Chairman of Kadin’s permanent committee on taxation, Prijo Handojo, said there were two main problems rooted in the tax office.
“First, there’s an admission by a tax official that tax auditors will get to a higher rank faster if they collect taxes as targeted,” he said.
He referred to the statement of Wahyu Tumakaka, the tax office head of supervision and law enforcement.
Wahyu was quoted by The Jakarta Post last week saying that after the tax reforms in 2007, tax auditors generally charged higher taxes to avoid being accused of collusion.
Tax auditors are appraised based on the amount of tax due and therefore set high targets. Prijo said taxpayers consequently filed objections because they were required to pay too much tax.
“Secondly, there are no punishments for tax auditors who make false calculations based on a taxpayer’s tax letter, despite sanctions specified in an article on the 2007 Law on Taxation,” he said.
Both Hariyadi and Prijo said Kadin was being neutral and not taking sides by blaming the presence of tax brokers in the tax office on these two main problems.
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