Reforms to laws, implementation may be delayed

Rendi A. Witular, The Jakarta Post, Jakarta

The much-awaited tax reform is unlikely to be implemented soon as lawmakers will not be able to finish deliberating on the revised draft of tax laws on schedule.

The House of Representatives' Commission XI for financial affairs chairman Paskah Suzetta pointed to various complicated issues in the draft laws and the tight schedule for the deliberation as the reasons.

"I am pessimistic that the draft laws can be approved this year. We need more time to seek advice from various parties to ensure that the laws are not contrary to the public good," said Paskah, who chaired a special team to deliberate on the revisions.

With the lawmakers set to go into recess from Oct. 1 to Oct. 23, they will have less than two months to finalize the three draft tax laws arranged by the Ministry of Finance's Directorate General of Taxation before having another recess by the end of the year.

Based on the initial government schedule, the revision -- the third since 1983 -- should be put into effect on Jan. 1, 2006.

The three draft laws discussed by the House are Law No. 16/2000 on general taxation arrangements and procedures, Law No. 17/2000 on income tax and Law No. 18/2000 on VAT on goods and services and luxury sales tax.

Included in the laws are ways to address taxpayers' concerns over uncertainties in collection and rebates, an introduction to a time limit for tax procedures and tax amnesty facilities, as well as selective audits of taxpayers.

Responding to the possible delay, Director General of Taxation Hadi Purnomo said lawmakers had no reason to delay the deliberation of the revised draft of tax laws.

"The draft laws are already established in terms of legal language and points. I don't understand the problems faced by the lawmakers in passing the revised drafts. It should think it would be an easy job," he asserted.

The draft laws, acknowledged by the business community as fairly business friendly, were created jointly by the government and a special team from the country's powerful business lobby group, the Indonesian Chamber of Commerce and Industry (Kadin).

Sources at the Directorate General of Taxation have argued that the proposed draft laws have accommodated some 95 percent of requests from Kadin, meaning that the government is seeking reform in the tax regime.

Elsewhere, Hadi said as of Sept. 15, the tax directorate had collected Rp 195 trillion (US$19.11 billion) in tax revenues from a full-year target of Rp 302 trillion.

The revenue includes Rp 95 trillion from non-oil and gas income tax, Rp 21 trillion from oil and gas income tax, Rp 67.4 trillion from value-added tax, Rp 9.8 trillion from land and property tax and Rp 1.8 trillion from other taxes.