Tax office's move sparks unease

Tax office's move sparks unease

Rendi A. Witular and Urip Hudiono, The Jakarta Post, Jakarta

As if its efforts to make new taxpayers comply with their
obligation is not enough, the Directorate General of Taxation is
introducing punitive measures for any incorrect information given
by taxpayers.

Following its plan to impose criminal charges on people
refusing to have a taxpayer's number, locally known as NPWP, the
tax directorate also plans to apply a criminal charge for any
errors in filling out the tax declaration form (SPT).

Based on article 38 in the draft revision of the law on
general taxation arrangements and procedures, taxpayers face a
minimum sentence of three months and a maximum of one year in
jail if their SPT is deemed incomplete, inaccurate or deceptive.

Taxpayers who fail to submit their SPT also face the same
charges.

Besides imprisonment, taxpayers will also face a fine, the
equivalent of up to two times the amount of their tax evasion.

"The criminal charges are already stipulated in the existing
laws. The government is introducing a minimum jail sentence in a
bid to enforce the laws," said a source at the tax directorate
who was involved in revising the laws.

The source said the criminal charges were maintained and
highlighted to compensate for potential tax revenue losses as a
result of incentives given for the business community in the
proposed draft tax laws.

The government had submitted to the House of Representatives
revisions to Law No. 16/2000 on general taxation arrangements and
procedures, Law No. 18/2000 on VAT and luxury tax and Law No.
17/2000 on income tax for deliberation.

Taxation analyst Revrisond Baswir of Gadjah Mada University
said the goal of the tax directorate in emphasizing the criminal
charges in the draft tax laws was basically acceptable in terms
of making the public more compliant.

However, he suggested that the tax directorate also seriously
address corruption issues so that it could encourage the public
to pay taxes and make taxpayers realize the government's dire
need of higher tax revenue.

"The criminal charges are introduced and emphasized at a time
when the public has lost trust in the tax office due to rampant
corruption in the institution. The timing is inappropriate to
force the charges as it will only scare people away," he said.

A survey by Transparency International Indonesia earlier this
year named the tax office and customs office the most corrupt
institutions in the country.

Revrisond also warned that the criminal charges could be used
by recalcitrant tax officials to extort taxpayers because of the
great authority given for the tax directorate to force people to
pay taxes.

During the past couple of months, the tax directorate has been
sending out millions of NPWP in order to reach the target of 10
million taxpayers by this month.

The sending of the forms is also aimed at anticipating the
implementation of the new tax laws which are expected to take
effect early next year.

However, many have complained about the NPWP, saying they
should not be paying tax, such as pensioners and domestic
helpers.

Tax collection in Indonesia, Southeast Asia's largest economy,
remains one of the lowest among major Asian economies. As of the
end of last year, only 3.67 million of the country's 220 million
people paid taxes.

Director General of Taxation Hadi Purnomo said the tax office
would continue sending out NPWP to taxable people in spite of the
response from the public.

"It will go on, as it is a computerized system which cannot be
stopped just like that. If there are any complaints, please
report them to us, as the system also has its flaws," he said,
admitting that his office had sent the NPWP to the wrong people.

Regarding the directorate's efforts, Minister of Finance Jusuf
Anwar, stressed that the tax office had to be careful in its
efforts to increase the number of taxpayers, since a mistake in
sending the NPWP would annoy people. The tax office is under the
Ministry of Finance.

"Those registered with the tax office should be potential
taxpayers," he said.