Office to aggressively search for new taxpayers

Rendi A. Witular, The Jakarta Post, Jakarta

Dony was annoyed when he received a tax office letter requiring him to register for a taxpayer number locally known as an NPWP, after he recently bought a 45-square-meter house in Karawaci, west of Jakarta.

Believing he would only end up in the clutches of corrupt and bureaucratic tax officials, the employee of a private Jakarta company threw the letter straight into the bin.

Donny might not have done so, if he had known that receiving income without an NPWP will soon be punishable with a minimum six-month and a maximum six-year jail term and a hefty fine.

In previous administrations, taxable employees could choose whether to have a tax number or let their companies pay the taxes for them.

Although the amount paid through companies was a little more, the stories of corrupt officials extracting money from otherwise honest taxpayers put many people off registering.

But according the country's taxation chief, things are about to change, with all people soon being required to have a NPWP.

"The Directorate General of Taxation is serious about extending the number of taxpayers into the tens of millions by initiating several steps, including creating stiffer penalties for taxable people who do not have the NPWP," director general of taxation Hadi Purnomo said recently.

Hadi said aside from proposing tough sanctions for non-NPWP holders in the upcoming draft revision of the tax laws, the office was now actively identifying and contacting people who it believed should register.

The move comes after mounting pressure from President Susilo Bambang Yudhoyono for the office to address the problem of low tax collection.

As of the end of last year, only 3.67 million of the country's 220 million population paid taxes, with collections contributing to 13.5 percent of the gross domestic product -- one of the lowest among large Asian economies.

To increase the number of taxpayers, the directorate has been sending out millions of tax number application forms to those it has categorized as taxable during the past few months.

Taxable people are traced by the directorate based on their credit card information, passport registrations and business activities, as well as information acquired about motor vehicle, land and property purchases.

However, some forms have been sent to the wrong people, including pensioners and domestic helpers who earn less than the minimum Rp 12 million (US$1,188) a year in taxable income.

The directorate aims to boost the number of taxpayers to 10 million people nationally by October and on Oct. 19, President Susilo is scheduled to hand over the 10 millionth registration number to a taxable citizen.

However, not all taxable people who receive the application forms are automatically applying for the NPWP, since the existing tax laws still give people the choice not to get the number.

"I prefer not to get a tax registration number because I heard it is complicated and annoying. I would rather pay higher taxes than deal with this complexity every year," said Denny, a state- owned bank employee who has an annual income of some Rp 48 million.

Even if the tax directorate fails to achieve its target of 10 million taxpayers by October -- due to reluctance of people like Dony and Denny -- officials are likely to be smiling if the new laws are passed by the House of Representatives for execution early next year.

Besides imprisonment, tax evaders would also have to pay up to four times their unpaid taxes back in fines.

The directorate will also have the authority to inspect the amount of taxes paid by individuals for the past five years based on its own calculations.

"Still, I won't ask for another letter from the tax office," Dony said. "Instead, I will fill in the form at the directorate's website (www.pajak.go.id). I don't want to go to jail," he said, grinning.