Despite the success of the government’s tax amnesty for administrative violators, dubbed as the Sunset Policy, there will be no extension beyond the Feb. 28 deadline.
The Sunset Policy is a program by which registered taxpayers are given the chance to settle their previously unreported obligations. Taxpayers who submit accurate reports will not be scrutinized and will be freed from paying tax penalties on previous liabilities.
Finance Minister Sri Mulyani Indrawati said Thursday the government would not extend the policy again despite another request from businesses.
“We could not extend it again and again,” Mulyani said.
The Sunset Policy was supposed to end on Dec. 31, 2008. However, the government decided to extend it until Feb. 28.
Businessmen argued that due to the global economic crisis, they were busy redesigning their plans, thus losing time to submit and improve their previous tax reporting.
Speaking before the House of Representatives’ commission XI for financial affairs, Mulyani said the two-months postponement was expected to provide time for people to honestly improve their tax records.
Mulyani said Indonesia’s tax revenues had been dominated by tax from corporations, not individuals, which had prompted the Finance Ministry to extend the Sunset Policy.
“In developed countries, individual income tax is bigger than corporate income tax. In Indonesia last year, corporate income tax accounted for 77.11 percent of non-oil and gas tax revenues, while individual income tax was only 22.89 percent,” she said.
“Also, the extension will enable the tax office to have a strong and wider tax base to (help) detect tax evasion,” she added.
Between January and September, an average 4,747 people applied for a tax registration number (NPWP) each day. But in the period up to Dec. 31, the tax office recorded an average of 163,255 daily applicants.
In December alone, the tax office approved 1.57 million new taxpayers. Between Jan. 1 and Jan. 20, another 745,172 people applied for the NPWP.
In 2008, registered taxpayers improving their reporting accounted for an additional Rp 5.56 trillion (US$492 million) in tax revenue.
Last year’s tax revenue from the non-oil and gas sector jumped by 15.2 percent to Rp 571.1 trillion from the initial Rp 534.53 trillion target.
In January this year, the tax office received additional revenue from tax returns worth Rp 1.43 trillion.
“This shows that the Sunset Policy is a success as tax revenues rise. It means the policy extension is useful because taxpayers agree to honestly fix their previous tax reports ,” director general of taxation Darmin Nasution said.
“We are being helped (by the public) because there are additional revenues. As taxpayers fix their tax reports, we have a new basis for tax revenues in the future,” he added.
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