Tax office sends one tax evader to jail, warns others

Tax office sends one tax evader to jail, warns others

Rendi A. Witular, The Jakarta Post, Jakarta

The Directorate General of Taxation has sent one tax evader to
prison for failing to pay Rp 11 billion (US$1.32 million) in tax
arrears, warning another 70 tax evaders they could face the same
fate if they continued to withhold their tax payments.

Director General of Taxation Hadi Purnomo announced on
Thursday that the Minister of Finance had issued a decree
approving the detention of the recalcitrant taxpayer pending
payment of his taxes to the state.

"We have detained the taxpayer. We are now waiting for him to
pay Rp 11 billion to the state, or else he will spend the next
six months and an extension of another six months in prison,"
Hadi said.

He refused to disclose the full identity of the tax evader,
giving only his initials JL. He owns an import company,
identified only as PT EI, located in Sawah Besar subdistrict in
Central Jakarta.

Hadi said that JL had been sent to the notorious Salemba
Penitentiary in Central Jakarta, but could file an objection with
the administrative court while in detention.

He explained that in the case of JL winning an appeal against
his detainment, the directorate would pay compensation of Rp
100,000 for each day that JL was detained and publish an
announcement in a domestic newspaper to rehabilitate his name.

Meanwhile, the outgoing head of the tax collection division at
the Directorate General of Taxation, Djangkung Sudjawardi, said
there were 70 other tax evaders awaiting imprisonment.

He explained that two of the 70 tax evaders had owed taxes
from last year and had almost been sent to prison along with JL.
But at last minute the directorate gave them a grace period
because they had submitted bank guarantees.

According to Djangkung, who is also a civil investigator at
the directorate, the remaining 68 were more recent tax evaders
and had been listed as so during the first nine months of this
year.

"The tax directorate has issued distress warrants to and
travel bans on the 68 new uncooperative taxpayers who owe the
state around Rp 674 billion in combined tax arrears," he said.

He also said that as of the first nine months of this year,
tax arrears increased by 38 percent to Rp 18 trillion from Rp 13
trillion in the same period of last year.

Government 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.

To date, the tax office only would go as far as confiscating
the assets of tax evaders or banning them from traveling
overseas.

In April, the Ministry of Finance and Ministry of Justice and
Human Rights inked an agreement allowing the tax directorate to
detain uncooperative tax evaders in state prisons.

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

Elsewhere, Hadi said that between Jan. 1 and Oct. 15 this
year, the directorate had collected 71 percent of its domestic
tax revenue target for this year.

"We have collected Rp 149 trillion in tax revenue, excluding
excise duties. We are optimistic that we will meet this year's
target," he said.

The government has set the tax target for this year at Rp
236.9 trillion, including revenue from excise.