Two tax evaders to be jailed

Rendi A. Witular, The Jakarta Post, Jakarta

The Directorate General of Taxation is seeking to send two uncooperative expatriates to prison for failing to pay a total of Rp 67 billion (US$7.97 million) in tax arrears, a senior tax official said.

"We are still waiting for the green light from the Minister of Finance for the two expatriates to be put into jail. But if they cooperate we will drop the plan," Director General of Taxation Hadi Purnomo told the press on Tuesday.

The Directorate General of Taxation has also warned another 16 expatriates that they could face the same fate if they continue refusing to pay their taxes.

Hadi declined to reveal the identity of the two foreigners.

However, a source at the directorate said the two foreigners were from the United Kingdom and Japan.

Hadi said the two foreigners had been barred from leaving the country.

The tax directorate has accused them of failing to pay their corporate and personnel income taxes.

Meanwhile, the outgoing head of the tax collection division at the Directorate General of Taxation, Djangkung Sudjawardi, said the two expatriates worked in local units of prominent multinational companies.

"They don't work in small or medium companies, but in large ones. They are dealt with by the special tax office for foreign- investment companies and publicly listed companies," said Djangkung, who even refused to reveal in which businesses the firms operated.

Djangkung said his the directorate general would inform the embassies of the two foreigners if the Minister of Finance gave his approval for their detention.

According to the prevailing regulations, the Director General of Taxation is allowed to send tax evaders to jail. However, in the case of those defaulting on taxes levied by the central government, such as income tax, land and property tax and value- added tax, the tax office must first obtain the approval of the Minister of Finance before acting.

In the case of taxes imposed by local governments, such as vehicle tax, restaurant tax and entertainment tax, local tax officials only need the approval of the respective governor.

For the first time in the country's recent history, the tax directorate general recently sent a tax evader to prison for failing to pay Rp 11 billion in tax arrears. The tax evader, identified only by the initials JL, was sent to Cipinang penitentiary on Monday morning after being on the run for four days.

Djangkung said that as of the first nine months of this year, the level of tax arrears had increased by 38 percent to Rp 18 trillion from Rp 13 trillion in the same period of last year.