Tax chief won't back down on controversial policy

Rendi A. Witular, The Jakarta Post, Jakarta

Despite criticism from business players, the government is sticking by its policy of sending allegedly recalcitrant tax evaders to jail without trial if they continue not to pay the taxes they owe, a senior tax official has said.

Director General of Taxation Hadi Purnomo said that the directorate would not back down on its recent move to detain alleged tax evaders as the policy was backed by the regulations.

"The show must go on. We will continue to send uncooperative tax evaders to jail as we have the regulations on our side," said Hadi on the sidelines of a hearing with the House of Representatives' finance commission on Tuesday.

He said that the decision was based on Government Regulation No. 137/2000 on tax evasion, which permits such action.

Businessmen and experts said earlier the move by the tax directorate could further nurture extortion and collusion as it could be abused by unscrupulous tax officials to intimidate taxpayers.

They said that the government also needed to act as firmly against corrupt tax officials.

However, Hadi said: "There is no regulation that permits the detention of tax officials without trial. If any abuses of the detention policy occur, the public should let the directorate know by providing evidence."

Thus far, two tax evaders have been jailed, local businessman Jasman Lim and Briton Mark Michael Greenwood.

Jasman was jailed for alleged nonpayment of corporate taxes amounting in total to Rp 11 billion (US$1.29 million), while Greenwood's tax arrears were Rp 45.8 billion.

Hadi said that Jasman had handed over some of his assets in part payment, and that the tax directorate was currently assessing his remaining assets.

As for Greenwood, the directorate had yet to receive any payment, said Hadi.

He also said that no officials had come to see him from the British Embassy, implying that the embassy had no objections to Greenwood's detention, contrary to press reports.

The tax directorate, which is a unit of the Ministry of Finance, said there were 68 other tax evaders awaiting detention, including 17 expatriates, with a number of them owing larger arrears than those allegedly owed by Jasman and Greenwood.

However, the directorate said they had not been detained yet as they had shown "good cooperation" by handing over assets as a guarantee -- the directorate refused to disclose the details of these payments so that they could be verified by the public.

Elsewhere, Hadi said that the directorate planned to set up five new regional tax offices for the purpose of netting new taxpayers and at the same time increasing the level of taxpayer compliance.

Two new tax offices would be established in Jakarta and one each in West Java, Central Java and East Java.