Tax evaders may be jailed for a year without trial

Tax evaders may be jailed for a year without trial

Rendi A. Witular, The Jakarta Post, Jakarta

Tax evaders could be sent to prison for a maximum of one year
without trial under a new decree to be signed by the Ministry of
Finance and Ministry of Justice and Human Rights, a senior
governmental official said on Thursday.

Head of the tax collection division at the Directorate General
of Taxation at the Ministry of Finance Djangkung Sudjawardi told
The Jakarta Post on Thursday that the decree, which will come
into effect "sometime in April", is aimed at forcing recalcitrant
taxpayers to pay their taxes.

The move comes amid the government's growing concern over the
rising amount of tax arrears.

Tax arrears payable over the past 10 years have reached Rp 17
trillion (US$1.9 billion), according to the directorate's data.

"The joint decree, which is in line with Government Regulation
No. 137/2000 on tax evaders, will enable us to send delinquent
taxpayers directly to prison," said Djangkung.

Actually, Djangkung explained, regulation No. 137/2000, which
came into effect early in 2001, permits the tax office to detain
tax evaders. However, it was reluctant to carry out the mandate
given the lack of support from other ministries.

Thus far, the tax office only dares to confiscate the assets
of tax evaders or ban them from traveling overseas, according to
Djangkung.

The country's penitentiaries are under the auspices of the
Ministry of Justice and Human Rights. Thus, with the ministry
wiling to cooperate, the tax directorate can now use the prison
to detain tax evaders, he said.

Based on the joint decree, temporary detention is imposed on
non-cooperative taxpayers who have a tax obligation amounting to
over Rp 100 million to either the central or local governments.

Prior to imposing detention, the tax office will send a letter
to tax evaders asking them to pay their taxes within 21 working
days. If the letter is ignored, the tax office will issue a
"distress warrant" for the taxpayers to settle their tax
obligation within 14 working days.

If the taxpayers still refuse to comply, without a reasonable
explanation or any attempt to appeal to the tax court, the tax
directorate would ask the Ministry of Finance for a detention
approval.

An approval from the ministry will be issued within seven
working days.

Once the approval is granted, tax officials, accompanied by
local police or officials from the Attorney General's Office,
could arrest the unscrupulous taxpayer.

Approval from the Ministry of Finance is needed if the
taxpayer defaults on taxes imposed by the central government such
as income tax, land and property tax and value-added tax.

While, as far as taxes imposed by local government are
concerned, such as vehicle tax, restaurant tax and entertainment
tax, tax officials will only need approval from the governor.

Djangkung said that starting in April, the tax directorate
will issue distress warrants and travel bans to 60 non-compliant
taxpayers who owe the state Rp 1.5 trillion in tax arrears.

Fifteen of these taxpayers are expatriates, mostly from the
U.S., who risk detention if they continue to be uncooperative,
Djangkung warned.

Of the total Rp 17 trillion in tax arrears the tax directorate
is now seeking to regain, around Rp 5.5 trillion is owed by
foreign companies and individuals.

The directorate could only recoup some Rp 250 billion worth of
tax arrears through the sale of confiscated assets in 2002.