TheJakartaPost

Please Update your browser

Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.

Jakarta Post

Fight against tax evaders escalates

In a move seen as a strong message that the government is serious about fighting against tax evaders, the tax office has imprisoned a high-level employee of a foreign leather-trading company

Khoirul Amin and Tassia Sipahutar (The Jakarta Post)
Jakarta
Sat, January 31, 2015

Share This Article

Change Size

Fight against tax evaders escalates

I

n a move seen as a strong message that the government is serious about fighting against tax evaders, the tax office has imprisoned a high-level employee of a foreign leather-trading company.

The 61-year-old detainee, identified only by the initials SC, works for PT DGP, which has evaded taxes for over five years. Unpaid taxes amounted to Rp 6 billion (US$470,339), said Dadang Suwarna, director general of audit and tax collections, on Friday. '€œWe want to make it clear that if there are those evading taxes, we will actively enforce the law,'€ Dadang said.

Aiming to collect more taxes this year, the government is reinforcing a regulation that allows tax evaders with total unpaid taxes worth more than Rp 100 million to be held in a dedicated debtors prison.

The tax office has already come up with 46 names responsible for evading Rp 1.37 trillion worth of taxes who will be taken to debtors prison.

Seven of them in East Java and South Sumatra will be imprisoned next week, excluding SC and a colleague, as they have evaded Rp 13.6 billion in taxes. SC'€™s colleague fled overseas before the Finance Ministry issued a permit for his imprisonment.

As of Friday, it was planned that SC would be detained in a prison cell next to the children'€™s cells at Salemba Penitentiary in Central Jakarta, said Imam Suyudi, the head of the penitentiary section in the Jakarta division of the Law and Human Rights Ministry.

'€œSC will be treated like other prisoners, except that he will not be placed in a criminal prison cell. We will provide him with Rp 14,000 a day for meals, the same that other prisoners get,'€ he said.

SC will be imprisoned for six months, but could be released earlier if he pays the taxes before the end of six months, according to the regulation. If, at the end of six months, the taxes have yet to be paid, SC'€™s sentence could be extended for another six months.

Before imprisoning tax evaders, the tax office (the Finance Ministry'€™s directorate general of taxation) first issues warning letters and overseas travel bans then traces the evaders'€™ assets to see if they are capable of paying.

Dadang said the tax office would fully enforce the law to fight tax evaders in an effort to boost the country'€™s tax revenues, which are targeted at around Rp 1.24 quadrillion (non-oil and gas), a 39 percent increase from last year'€™s collection.

Finance Minister Bambang Bro-djonegoro has said that it would need '€œextra efforts'€ to meet the target, but his ministry has rolled out several strategies to achieve it, other than imprisoning tax evaders.

Law enforcement improvement might deliver Rp 22.5 trillion in tax revenues by year-end, according to the tax office'€™s calculation.

Closer monitoring of institutional taxpayers in nine priority sectors '€” real estate, construction, trade, mining, agriculture, financial services, telecommunications, fisheries, health care and pharmacies '€” will potentially bring in around Rp 140 trillion in tax revenue, data from the office show.

'€œWe will look into the electronic commerce segment to find potential tax sources. Electronic transactions are already subject to taxation in some countries,'€ Finance Ministry'€™s acting director general of taxation Mardiasmo said during a meeting with the budget committee at the House of Representatives on Thursday.

The ministry has also set its sights on numerous transactions in financial services, including insurance. '€œWe may implement taxing on top-up insurance plans,'€ he added.

There were up to 30 million holders of taxpayer numbers (NPWP) in Indonesia by the end of 2014, but less than 2 percent of them had paid their taxes appropriately.

For individual taxpayers, the tax office has planned on simplifying tax payment methods and expanding its tax collection coverage to include purchases of high-end jewelry or private jets and the possession of luxurious lodgings, bags and shoes. '€œIf they are able to purchase such items, they surely have more than enough income to pay their taxes,'€ Mardiasmo said.

Your Opinion Matters

Share your experiences, suggestions, and any issues you've encountered on The Jakarta Post. We're here to listen.

Enter at least 30 characters
0 / 30

Thank You

Thank you for sharing your thoughts. We appreciate your feedback.