Kadin wants tax amendments to conform to global standards
Kadin wants tax amendments to conform to global standards
Urip Hudiono, The Jakarta Post, Jakarta
A powerful business group has reiterated its demand that the
current tax reform plan leads to a tax regime that conforms to
international standards of equity and competitiveness so as to
ensure a favorable business and investment climate.
"Kadin fully supports the government's efforts at reforming
the country's tax legislation for the betterment of the economy
through higher tax revenues," M.S. Hidayat, chairman of
Indonesian Chamber of Commerce and Industry (Kadin), said on
Tuesday during a hearing with the House of Representatives
committee discussing the draft tax amendment.
""We, however, would suggest that it also addresses several
issues affecting the current tax regime that prevent it from
being business-friendly by ensuring that it adheres to worldwide
tax practices, and is consistent with its own self-assessment
principle.
"The revised tax laws must also incorporate the principle of
equality, and have competitive tax rates."
Conforming with international tax practices means the
scrapping of some stipulations that are uncommon in the tax
regimes of other countries, particularly penal sanctions for
simple tax assessment errors, such as forgetting to completely
fill in the tax form, Hidayat said.
"Imposing penal sanctions for such simple slip-ups represents
the criminalization of administrative mistakes, which in other
countries are only sanctioned with fines."
As regards the principle of equality, Kadin acknowledged the
need for the tax office to have sufficient powers to fulfill its
tax collection duties, but not to such an excessive level that
could lead to potential abuses of power.
"Equality also means taxpayers have the right to enjoy easier
tax rebate procedures, besides their obligation to pay taxes,"
Hidayat said.
Indonesian Employers' Association (Apindo) chairman Sofjan
Wanandi said the new tax regime should, as part of the equality
principle, begin using the term "taxpayers" in place of the term
"those obligated to pay tax" -- the term currently employed.
"The old term comes from the colonial tax law, which was based
on official assessment. We must change this as we now use the
self-assessment principle, and because it better reflects the
rights and obligations of taxpayers," he said.
Self-assessment was an essential aspect of the tax
legislation, Hidayat continued, and it should be consistently
followed to ensure legal certainty in the tax regime.
"In practice, tax officials, due to their excessive powers,
can set the amount of taxes owed according to their own
subjective assessments," he said.
The ideal situation should be, "if there is a dispute over
this, taxpayers should only pay the amount based on their self-
assessments. They are, however, subject to fines if it turns out
that the amount is less than it should be. This is necessary to
discourage dishonest taxpayers."
Meanwhile, Kadin deputy chairman Hariyadi Sukamdani explained
that a competitive tax regime should not only mean one that had
lower tax rates, but also the implementation of a "single tax
payment scheme" for taxpayers.
"However, what we are seeing in the proposed amendments is
multiple income tax charges, especially for institutional
taxpayers such as companies. They are first taxed on their
revenue, and then shareholders are also taxed on dividends," he
said.
"We hope the revised tax legislation will address this issue,
leading to a more competitive business climate."