State suffers losses from unpaid import taxes

State suffers losses from unpaid import taxes

Rendi A. Witular, The Jakarta Post, Jakarta

Each year the state suffers an average loss of Rp 8 trillion
(US$909 million) in revenue from customs duties and import taxes,
an official at the Directorate General of Customs and Excise
said.

This annual loss is twice the amount of the Rp 4 trillion
budgeted for 2003 to help the poor survive this week's increase
in fuel prices and electricity rates.

The head of arrears collection at the directorate, Nirwala Dwi
Heriyanto, told The Jakarta Post on Friday that in 2001 and 2002
the total duty and tax arrears reached Rp 17 trillion.

In 2002, that figure has been roughly calculated at about Rp 8
trillion.

"We are dealing with a serious problem of lost state revenue
here; this is a significant figure," said Nirwala, adding that
the directorate had designed a set of measures to collect the
arrears beginning in April.

The losses, however, have not affected the state budget
because the largest contributor to customs and excise revenue is
the cigarette excise.

Nirwala said the losses were caused by importers who underpaid
their tax obligations during the clearance process.

Indonesia uses a self-assessment tax system.

Nirwala said the customs office was usually unable to catch
the importers because they often used fake documents to establish
their identities and addresses.

Many importers cheat on the self-assessment system by
undervaluing their import duties and import taxes before clearing
their goods.

The importers then pay the artificially low taxes and duties
based on their self-assessment reports as a formality to clear
their goods.

After claiming their goods the importers quickly vanish to
avoid being charged later by customs officials for underpayment.

This situation is exacerbated by some customs officials who
are believed to collude with the importers to claim their goods.

There also are indications that customs officials assigned to
collect tax and duty arrears have taken bribes to end their
efforts. The arrears should be paid by importers at least 60 days
after they receive a notice of underpayment.

"The fact is that the arrears we are going to collect date
back to 2000. We are still investigating why our collection
officials failed to collect such a huge amount of arrears," said
Nirwala.

Nirwala also said some crooked importers managed to obtain
import licenses by colluding with officials at the Ministry of
Trade and Industry.

Until December of last year, the ministry was the only
institution authorized to issue licenses to importers. However,
due to several irregularities the Ministry of Finance passed a
new regulation obliging importers to obtain a second license from
the Directorate General of Customs and Excise.

The Ministry of Finance oversees this directorate.

To combat crooked importers and to help collect the tax and
duty arrears, the ministry will issue a new ministerial decree on
arrears prevention and publicly announce the 100 largest
corporate evaders of import taxes and duties.