LTO to chase 30 tax arrears worth Rp 8.4 trillion

Rendi A. Witular, The Jakarta Post, Jakarta

The new Large Taxpayers Office (LTO) will make the pursuit of 30 corporate tax evaders its top priority, a senior tax official said.

Director General of Taxation Hadi Purnomo said on Monday these 30 corporations had tax arrears amounting to Rp 8.4 trillion (US$941 million), or about 60 percent of the Rp 14.5 trillion in total tax arrears in 2000.

He declined to disclose the names of the 30 companies, but said they were among the country's 200 largest corporate taxpayers.

The LTO was established to collect taxes from the country's top 200 businesses, based on sales volume. As a starting point, it will use the corporate taxpayers list from 2000.

"We hope that through the LTO we will be able to reduce (large corporations' tax arrears) to 30 or 40 percent per year," Hadi said during the ceremony to officially launch the LTO.

The ceremony was led by Minister of Finance Boediono.

The government promised the International Monetary Fund it would take bold measures to minimize tax evasion, broaden the tax base, vigorously pursue tax evaders and clean up the corruption- infested directorate general of taxation. The establishment of the LTO is seen as part of these measures.

It has long been a public secret that large taxpayers often evade their real tax liabilities by conspiring with tax officials.

The government hopes to collect more than Rp 184 trillion in taxes this year.

Among the 200 largest corporate taxpayers in Indonesia are such prominent names as Freeport Indonesia, Gudang Garam, Indocement Tunggal Prakarsa, Bank Central Asia, Telkomsel and Timor Putra Nasional.

Hadi said one of the delinquent large corporate taxpayers was Timor Putra Nasional, the automotive company founded by former president Soeharto's youngest son, Hutomo "Tommy" Mandala Putra.

The directorate general of taxation is involved in a two-year legal dispute with Timor over some Rp 3.2 trillion in owed taxes. The company was largely able to escape its tax obligations while Soeharto was in power.

The coordinator of the LTO, Petronius Saragih, told The Jakarta Post that the failure of the 30 delinquent corporate taxpayers to pay income and value added taxes in 2000 was no oversight.

"It was more because of their ill-natured intention to refuse to pay taxes," he said.

Concerning the supervision of the LTO, Boediono said the Ministry of Finance was currently in talks with the National Ombudsman Committee about supervising the tax office.

"The LTO is a pioneering attempt to enhance good governance; it is a pilot project. Thus, despite setting up an internal ethics committee for supervision, we have also asked the ombudsman committee to supervise the office," said Boediono.

The following are the top 10 corporate taxpayers in 2000, according to two different tax service offices:

Top corporate taxplayers in 2000

1. Freeport Indonesia, 2. Telekomunikasi Seluler (Telkomsel), 3. Astra International, 4. Exspan Airsenda Inc, 5. Exspan Airlimau Inc, 6. BP West Java Ltd, 7. YPF Maxus Southeast Sumatra, 8. Inpex West Natuna Ltd, 9. BP Kangean, 10. Citibank N.A.

1. Toyota Astra Motor, 2. Gudang Garam, 3. Indah Kiat Pulp & Paper, 4. Unilever Indonesia, 5. H.M Sampoerna, 6. Indofood Sukses Makmur, 7. Honda Prospect Motor, 8. Indomobil Suzuki International, 9. Smelting, 10. Riau Andalan Pulp & Paper