Two firms to be tried for huge tax evasion

JAKARTA (JP): Director General of Taxes Fuad Bawazier yesterday submitted the dossiers of two tax evasion cases worth Rp 2.17 billion (US$910,000) to the Attorney General's Office.

Fuad said the cases involved CV Graha Pasifik in East Java and PT Supermix Wahana Tama in East Kalimantan.

Graha Pasifik is accused of issuing value added tax (VAT) invoices on fictitious transactions, costing the government Rp 770 million in lost revenue in 1992.

"The company issued VAT invoices in the name of its clients based on fictitious transactions. Then, the company applied for refunds on the VAT inputs which were not actually paid," Fuad told reporters after presenting the dossiers to Deputy Attorney General for Special Crimes Yunan Sawidji.

According to the VAT law, a manufacturing company is entitled to credit the 10 percent VAT that it pays for its inputs against the VAT it collects from the goods it delivers to other parties. If a manufacturer uses the goods as input to manufacture products for export, it can ask for the VAT paid on the inputs to be refunded.

Tax audits and investigations concluded that Graha Pasifik had credited input VAT payments, which it had never made because the VAT payments were based on fictitious transactions, Fuad said.

To conceal its fraud, Fuad said, Graha Pasifik had changed its name four times: to Jala Sutraindo in 1993, Singosari Jaya in 1994, Delta Pasifik in 1995 and Surabaya Habeyam Center in 1996.

"The investigations uncovered Rp 770 million in falsely claimed VAT tax refunds by Graha Pasifik only for the 1992 tax year. We expect that further investigations by the Attorney General's Office will reveal bigger sums of VAT payments being manipulated by the company in subsequent years," Fuad said.

He added that Supermix Wahana Tama in 1995 misused the facilities for value-added tax and income tax breaks granted to some companies operating in eastern Indonesia.

Fuad would not elaborate on the latter case which involved Rp 1.4 billion in government losses, saying that "it is too complicated".

"What is important here is that tax has become our main source of funding to finance the government's spending. And we are really serious in dealing with any tax evasion or manipulation," Fuad said.

The government expects to increase non-oil tax receipts by 15.59 percent to Rp 64.7 trillion next fiscal year, starting in April, from Rp 55.98 trillion this fiscal year.

Tax receipts, by state budget definition, include revenue from value-added taxes, income taxes, land and building taxes, import duties, excise and export taxes.

Director of Tax Investigation Djazuli Sadhani disclosed that his office had submitted 51 tax evasion cases worth more than Rp 150 billion to the Attorney General's Office last year.

The 51 cases included four taxpayers using different names.

District courts have handed down verdicts on the 51 cases. The verdicts were all in the favor of the tax office. But the defendants have appealed to higher courts.

Tax cases go to court whenever they involve crime, but those not involving crime usually go to the tax settlement body in Jakarta.

Fuad said the tax settlement body, the only body authorized to settle tax disputes between the tax office and taxpayers, could not settle disputes quickly because it had a large backlog of cases.

"This body was established in 1927 by the Dutch colonial administration. At that time, there were not as many tax disputes. But now, 70 years later, such disputes have been increasing sharply and the body has not enough manpower and resources to settle them all," Fuad said.

The government and the House of Representatives are now deliberating a bill on tax courts, which will take over the tasks of the tax settlement body.

The tax courts, if the bill is passed, can be established in other cities outside Jakarta. (rid)