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.