Tax compliance needs improvement: Official
Tax compliance needs improvement: Official
JAKARTA (JP): Only a little more than half of Indonesia's 1.3
million registered individual tax payers have fulfilled their tax
obligation in full, according to a senior official at the office
of the director general of taxation.
Director for tax education and information Nono Hanafi said on
Saturday that out of the 1.3 million tax payers, only 70 percent
submitted their tax forms, and only 60 percent actually paid the
tax in full.
He said that improving tax compliance among the country's wage
earners was crucial because tax revenues contributed around 60
percent of domestic revenues in the state budget.
Tax compliance will be even more crucial in the future as the
government is determined to reduce foreign borrowing to create a
healthy and credible state budget.
Tax revenues in the 1999/2000 fiscal year totaled Rp 97.4
trillion (US$11.45 billion) compared to Rp 87.7 trillion in
fiscal year 1998/1999.
"It's not yet optimum because the number of registered tax
payers was only 1.3 million out of the country's 220 million
population," Nono said.
The House of Representatives approved late in July amendments
to five tax laws which, among other things, aimed at improving
tax compliance, broaden the tax base, and improve the efficiency
of tax administration.
Tax officials said that the amendments were expected to help
the government increase the number of registered tax payers to
four million over the next five years.
Officials also said that the actual number of potential
individual tax payers was about 20 million.
Director general of taxation Machfud Sidik recently lambasted
the country's elite, including legislators, generals, and high-
ranking government officials, for evading tax payments.
He said that these people received incomes outside their taxed
salaries, which they did not declare to his office.
Machfud admitted that the government must improve public
services otherwise people would be discouraged from paying taxes.
Former finance minister Bambang Sudibyo said last month that
tax evasion in the country was a very serious problem, causing
the government to lose trillions of rupiah a year in unpaid
taxes.
He pointed out that in the 1999/2000 fiscal year, the amount
of taxable income not reported to the tax authority was estimated
at the alarming level of Rp 170 trillion compared to only Rp 27.7
trillion in the 1991/1992 fiscal year.
Bambang said that the amount of uncollected income tax in the
1999/2000 period was estimated at Rp 31.08 trillion compared to
Rp 5.08 trillion in the 1991/1992 fiscal year.(rei)