Taxpayers and penalties

Taxpayers and penalties

In recent years, a complaint has been addressed to tax
authorities by corporate taxpayers through their representative
the Indonesian Chamber of Commerce and Industry (KADIN) regarding
the excessive powers of tax officials in assessing taxes.

According to Article 38 of Law 16/2000, when taxpayers fail to
file their tax returns by negligence, such an offense shall be
punished by imprisonment for a maximum of one year, while non-
filers will also be fined equal to 200% of their unpaid tax.

Although the sanction is clear, in reality Article 38 is
seldom put into practice. There is a very good chance, however,
that some unscrupulous tax officials might be using this article
as a tool to propose "deals" with "bad" taxpayers. They might be
helping taxpayers provide their income tax returns and submit the
returns late with an expectation that the offense penalty will
never be applied.

This kind of corruption could be prevented, if not totally
eliminated, by making the severe punishment of article 38 more
lenient like in systems in New Zealand and Britian.

Applying the same philosophy of self-assessment, when faced
with non-filers, tax authorities in these countries issue a tax
determination using official estimates of tax dues and send them
out to taxpayers as a reminder. If taxpayers do not respond to
this "reminder", the tax amount due will stand and cannot be
contested in the tax court.

The tax amnesty review team wants to create a good environment
to encourage compliance with the new system. Encouraging people
to start with a clean slate is the main purpose of the proposal.
However, to do that, the tax system must be reengineered and
revitalized. And so must law enforcement.

NAME AND ADDRESS
WITHHELD