Threat not to pay taxes

Threat not to pay taxes

In the rallies held in response to the simultaneous increases
of fuel prices, electricity rates and telephone tariffs, the
protesters demanded that President Megawati Soekarnoputri and
Vice President Hamzah Haz resign. I can certainly understand this
demand. However, the threat made by the chairman of the
Indonesian Chamber of Commerce and Industry (KADIN) and the
chairman of the East Java chapter of the Indonesian Employers
Association (Apindo) that their members would boycott taxes (The
Jakarta Post, Jan. 10, 2003) defies reason.

I don't think that individual nor corporate taxpayers will
have the courage to implement this boycott. Tax regulations are
laws, and very heavy sanctions are placed on violators.

Articles 21, 23 and 26 of income tax regulations on value-
added tax and sales tax on luxury goods stipulate that these must
be paid on the 10th of next month at the latest, otherwise a fine
of 2 percent per month is imposed. Income tax must be paid at the
latest on March 25. Apart from administrative sanctions (the 2
percent fine), tax offices can impose other sanctions amounting
from 50 percent up to 100 percent the value of the outstanding
taxes. They are also authorized to confiscate taxpayers'
companies or belongings as payment.

As stipulated in Article 22, if tax remains outstanding,
imported goods can be detained by the customs office.

In short, companies can only defer paying income tax when they
are bankrupt, sustain heavy losses in revenue, or their earnings
in 2003 decline as a result of the 2003 hikes in fuel prices,
electricity rates and telephone tariffs.

This means another year must pass before companies can
realistically boycott tax payments.

SUNARTO PRAWIROSUJANTO

Jakarta