Tax pardon for

Tax pardon for problem taxpayers

From Bisnis Indonesia

The chairman of the Indonesian Economic Recovery Commission (KPEN) hopes that the next government will promptly apply a tax pardon to speed up the flow of funds and investment derived from problem taxpayers after they have taken flight abroad.

The KPEN chief also expected a reduction in fines of 5 percent to 10 percent instead of as high as 30 percent, as reported in Bisnis Indonesia on Aug. 16.

If that is simply what the KPEN chairman wanted, the tax pardon would be unnecessary. The government may, at any time, apply the relevant provisions of Law No.17/2000, with conditions to be determined by a government regulation.

Among the requirements are that funds or investments, both local and overseas, must be directly invested in businesses in Indonesia, with special rates (instead of fines) to be fixed at rates lower than general rates.

These new rates have a dominant role because apart from the consideration of state revenue increase, tax on the funds and wealth increments might "vanish" after negotiation with dishonest tax officials if high general rates were applied.

KARNANTO Jakarta