Three people arrested for alleged tax fraud

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)