Tax office ups pressure on tax evaders

The Jakarta Post, Jakarta

Tax office officials plan to send a businessperson from Bali to jail for alleged non-cooperation in settling tax arrears, in a move to step up pressure against tax evaders.

Djangkung Sujawardi from the Directorate-General of Taxation told reporters on Monday that the office was seeking the approval of Minister of Finance Boediono to detain the person. He declined to give the businessperson's name.

He added that the office had been cooperating with relevant institutions to prohibit some 40 alleged uncooperative taxpayers from traveling internationally.

According to a regulation issued in 2001, the tax office is allowed to jail people they believe are recalcitrant taxpayers for up to a year without trial.

So far, the office has detained at least two tax evaders.

The government is under pressure to collect more tax revenue to help finance the state budget. But despite the detention threat, the collection of taxes remains low as many continue to find ways of avoiding official tax payments.

Djangkung said that during the first seven months of this year, the tax office had only managed to collect around Rp 7.2 trillion, or around a fifth of the total Rp 36 trillion in tax arrears.

According to Djangkung, one of the persons previously imprisoned had so far repaid Rp 3 billion of a total obligation of Rp 11 billion, while the other has paid Rp 5.3 billion of Rp 45 billion the total obligation to the state.

Meanwhile, the Indonesian Chamber of Commerce and Industry (Kadin) demanded equal treatment for taxpayers, a condition not only crucial for ensuring fairness, but also to prevent more irregularities.

Deputy chairman of Kadin, Haryadi B. Sukamdani said rulings on the taxation sector had fallen short of applying the principle of equality before the law and favored the tax office over taxpayers.

"The tax office is equipped with immense power, it can even detain people without trial.

"On the other hand, there is little legal protection for taxpayers suffering from unfair treatment, or the impact of the tax office's mistakes," Haryadi said.

Haryadi claimed that such injustices would eventually prove detrimental to efforts to boost tax collection, as the taxpayers' weak bargaining power often led them to engage in "suspicious" means of settlement with tax officials.

"Indonesia has a huge potential in terms of tax revenue, but since we have so many 'gray areas', that great potential has been hampered by many leakages," Haryadi said.