Tax evasion
Tax evasion
From Suara Karya
As a witness in the Eddy Tansil trial in the Central Jakarta
Court, Ms Amelia (Manager of Danamon Bank, Tamansari branch)
revealed that defendant ET deposited his money, involving Rp 178
billion, in a Cayman Island bank through the services of Danamon
Bank. This was done to evade income tax in Indonesia. Beside ET,
there are many people who deposit their money in banks abroad
such as Macao, Hong Kong, Lichstentein etc., as these countries
are "tax havens" for depositors. Almost all well-known private
banks in Indonesia give these services.
There is nothing wrong with this practice because since the
beginning of the New Order era Indonesia has introduced a free
foreign exchange policy. In other words, foreign currencies can
be brought in or transferred out of Indonesia without permission
from the Ministry of Finance and the Central Bank, and virtually
without control.
The money deposited abroad will generally be channeled back to
Indonesia as credits to banks in this country, and these banks
will in turn extend the money to clients as loans. Basically this
system does not harm the society, but the interest rate of the
loan can be very high.
In this case, the government of Indonesia suffers great losses
because it cannot collect taxes on interest of money deposited
abroad. There is no obligation for the banks in Indonesia,
according to Law No 7/1983 article 23, to collect income tax when
paying the interest of money deposited abroad. Also, based on
Basic Law on Banks 1992, the banks in Indonesia have a legal
obligation to keep the client's finances confidential, unless
there is permission from the Ministry of Finance. This law is a
great advantage to wealthy people, corruptors,and manipulators
who have the facilities to personally deposit their money abroad,
or through banks in Indonesia.
They enjoy income-tax evasion in Indonesia, and only have to
pay a very small amount of tax in the country where they deposit
their money.
The Directorate of Tax is helpless in this matter. So
injustice prevails because the common people have no chance to
evade taxes, as they are deducted from their salaries. It may be
noted that a vast amount of money is deposited in foreign
countries.
SUHARSONO HADIKUSUMO
Jakarta