A survey found that Indonesia could lose half of its tax revenues from the rampant corruption plaguing the tax-collecting agency.
Jakarta-based think tank Perkumpulan Prakarsa said that for 2012, the potential losses in tax revenue could reach Rp 521 trillion (US$55.9 billion) or almost 50 percent of the total.
The government expects Rp 1,033 trillion in tax revenues this year.
Perkumpulan Prakarsa executive director Setyo Budiantoro said on Tuesday the figures came from calculating the country’s tax revenue capacity. According to a standard used by the International Monetary Fund (IMF), Indonesia is categorized as a middle-income state.
J. Prastowo, a researcher at the think tank, said that the loss in tax revenue could be caused by systemic practices of corruption, incompetent tax officials and inconsistencies in tax regulations.
“The Finance Ministry never takes these problems into account, and the least that the ministry’s Directorate General on Taxation can do is to make predictions,” he said.
Prastowo also said that it was easy for companies to evade tax responsibilities.
He said that most companies have three methods of tax evasion; failing to report their assets to tax offices, reporting the assets below their actual value and paying an amount under the actual tax owed.
He said that companies even went as far as bribing tax officials.
“Lately, offers often come from taxpayers rather from the tax officials,” he said.
The survey also found a low compliance rate among Indonesian companies and local workers.
The Central Statistic Agency’s (BPS) data shows that there are up to 12 million Indonesian firms, but only two millions registered as taxpayers.
Of the 135 million middle-income workers, only 20 million workers registered themselves as taxpayers.
The think tank also found problems at the tax court, a special court to settle taxation disputes, where taxpayers took advantage of legal loopholes to evade taxes.
Meanwhile on Tuesday, Agus Subagio, a retired tax official and a lecturer at the State Accounting University (STAN), filed a judicial review at the Constitutional Court (MK) against Law No. 14/2002 on Tax Tribunal, claiming that he had been treated unfairly.
“I have a tax case that is currently ongoing at the tax court. The case started in 2009 and throughout the court proceedings, the court asked me to first pay 50 percent of my tax obligation if I wanted to appeal the court’s ruling,” he told The Jakarta Post.
He said that the court request did not make any sense, as it contradicted Law No. 28/2007 on General Rules of Taxation and made no mention of the 50 percent cost of litigation.
“It’s strange because in some cases the tax court applies the rule, but in others they just ignore it,” Agus said.
The MK, however, decided to reject the proposal, citing procedural problems.
The court instructed Agus to present a stronger case for future proceedings.
Setyo said that taxpayers mostly won their cases in the court, alleging that tax officials like to offer illicit deals to taxpayers who seek litigation.
“The problem with tax is more of a systemic one,” he said.