Three people arrested for alleged tax fraud

JAKARTA (JP): The Attorney General's Office has detained three businessmen, and will probably arrest two others soon, for allegedly manipulating the 10 percent value added tax.

The office's spokesman, Pontas Pasaribu, told reporters yesterday that Hartono, Baharuddin Umar and Tony Effendy, who were arrested on Thursday, were suspected of forging tax invoices that may have caused financial losses of up to Rp 58.03 billion (US$26.37 million).

"There are strong indications that the three men, along with the other two who have yet to be arrested, have violated...the 1971 Anti-corruption Law," Pasaribu said.

Violators of Article 1a face a maximum sentence of life imprisonment.

Pasaribu also said that the five businessmen were suspected of belonging to a syndicate of 51 trading companies currently under investigation for alleged tax invoice forgery. The companies are located in Jakarta and its satellite cities of Tangerang and Bekasi.

Pasaribu said some of the companies sold fictitious tax invoices which stated that some transactions or importing activities had been conducted with other members of the syndicate. The latter could then claim a 10 percent refund of their value added tax at the office of the Directorate General of Tax.

By law, trading companies with gross sales of at least Rp 240 million (approximately US$105.263) should register for taxable firm status at the tax office.

Smaller companies may also request the same status, which allows them to collect the 10 percent value added tax from their customers.

The taxes collected by the companies, under the existing mechanism, can be credited against similar taxes already paid to their wholesalers. When the amount of taxes paid is higher than the sum collected, the companies are allowed to have the difference refunded.

Pasaribu said that a number of the 51 trading companies are also suspected of falsifying names and addresses to fool tax officials.

He said that the companies selling the fictitious invoices would be fined one to three percent, or about Rp 25 (US 1 cent), for every US dollar worth of imported goods.

The Attorney General's Office, fearing the suspects might escape, has also slapped a travel ban on the five businessmen.

He did not deny the possibility of tax officials being involved in the tax scam.

"We will question the Central Jakarta office of the Tax Directorate General on Monday about the tax manipulation," he said. (imn)