Quick processing of VAT refunds ordered
JAKARTA (JP): Minister of Finance Mar'ie Muhammad has instructed the directorate general of taxation to speed up the processing of value added tax (VAT) refunds for export-oriented companies to help boost exports.
Mar'ie told a House Budget Commission hearing yesterday the government was still in arrears for the disbursement of VAT refunds to eligible companies.
"The refund backlog is quite big," Mar'ie said.
He refused to say how much the government owed exporters.
He said the slow processing of VAT refunds was because of the tax office's extreme caution over possible abuse by exporters.
"It is true that there are unscrupulous exporters who falsify tax invoices to get VAT refunds. However, don't generalize and say all exporters as bad just because a few of them are unscrupulous," Mar'ie said.
Exporters are exempt from duties and VAT on materials imported for the production of export goods. Because they are required to pay duties and VAT on materials upon their arrival -- if they are not processed in a bonded zone -- they are entitled to a refund on the duties and VAT which have been paid.
The tax office is responsible for the VAT refunds and the Directorate General of Customs and Excise for the duties refunds.
Companies registered at the Export Service Facilitating Agency get both VAT and duties refunds from the agency.
The minister instructed the directorate general of taxes to take legal action against those trying to embezzle state funds through VAT refund facilities by falsifying tax invoices.
"We better take legal actions against those unscrupulous exporters, and against tax officials who collude with them rather than slowing down the processing of VAT refunds for bonafide exporters," Mar'ie said.
He said the directorate general of taxes had submitted dozens of fictitious VAT refund cases, worth more than Rp 161 billion, to the Attorney General's Office.
District courts have handed down verdicts on 51 tax evasion cases worth Rp 150 billion. The verdicts were all in favor of the tax office. But the defendants have appealed to higher courts.
Tax cases go to court whenever they involve crime, but those not involving crime usually go to the tax arbitration body in Jakarta.
Mar'ie said many exporters had complained about the slow processing of VAT and import duty refunds.
Some textile exporters, for instance, said they got their refunds as late as one year after submitting their claims.
Mar'ie said the slow processing of VAT refunds would affect exporters' cash flows, especially small exporters.
Speedy VAT refunds would improve exporters' cash flows enabling them to strengthen their working capital or even expand their export production capacity.
Mar'ie told the commission that the government had disbursed Rp 2 trillion (US$840 million) in VAT refunds during this fiscal year's first nine months.
Of the total VAT refunds this fiscal year, the agency disbursed only Rp 50 billion, agency chairman Tjoek Soeroso said.
Tjoek said his agency had also disbursed Rp 50 billion in duties refunds for export-oriented industrial companies.
About 2,000 exporters are registered with the agency. Their exports account for 35 percent of Indonesia's non-oil exports.
"We only disbursed Rp 100 billion (during the first nine months of this fiscal year) because most of the companies registered with the agency have got duty and or VAT exemptions for their imported inputs from the directorate general of taxes," Tjoek said.
He said companies entitled to duty drawback must provide the agency with guarantees for their duty and VAT exempt imported goods. The guarantees can be bank guarantee or customs bonds or promissory notes. (rid)