The government is set to crack down on tax evaders and money launderers, President Joko '€œJokowi'€ Widodo having instructed the integration of forces in a bid to increase the country'€™s low tax receipts.

In a limited Cabinet meeting on Monday, Jokowi asked for the integration of the reporting and financial transaction analysis system and that of tax reporting and monitoring.

'€œI want you to prepare concrete measures to improve enforcement of laws on tax crimes and money laundering,'€ he told those in attendance, including taxation director general Ken Dwijugiasteadi, Financial Transaction Reports and Analysis Centre (PPATK) chairman Muhammad Yusuf and customs and excise director general Heru Pambudi.

Finance Minister Bambang Brodjonegoro and Coordinating Economic Minister Darmin Nasution were also present.

Integration of the two systems is expected to help push up the country'€™s tax ratio to between 14 and 15 percent of GDP from the current 12.2 percent, widen the tax base and increase tax revenues.

The Finance Ministry has already collected data from thousands of recalcitrant Indonesian citizens who refuse to comply with regulations and stash their funds abroad, Bambang said.

'€œThe pattern is the same everywhere, which is to create an SPV [special purpose vehicle]. The most popular place for Indonesians to do so in the British Virgin Islands. The SPV retains all the funds in one country,'€ he said, declining to name the country.

Six thousand Indonesian citizens and 2,000 SPVs are linked to such practices in the country in question, government data show. The government claims that it has identified the bank in which the funds are kept and the account holders.

'€œThese are undeclared funds and they have not been reported in annual tax forms. We will go after them,'€ Bambang added.

Almost 2,000 foreign investors in Indonesia have evaded tax in the past 10 years by claiming to have suffered losses; the government estimates its loss from such evasion at Rp 500 trillion (US$38 billion).

A newly issued government regulation is expected to boost the PPATK'€™s power and reach as well, regulating the submission of data and information by state and private agencies to prevent and eradicate money laundering.

Under the regulation, the PPATK has the authority to request various data, including on clearing and settlement in the financial services industry, on taxation and on politically exposed persons, regardless of any secrecy clause.

CReco Consulting economist Raden Pardede said that the integration might not produce major results for two or three years.

Separately, Center for Indonesia Taxation Analysis (CITA) executive director Yustinus Prastowo said that law enforcers must make sure they had valid data before proceeding with any necessary action.

'€œAlmost 2,000 PMAs avoided paying taxes for the past 10 years. Really? Where were the authorities back then?'€ he asked.

Jokowi'€™s administration is aiming to boost tax collection, with the revenues gained to be used for productive spending such as on infrastructure, but so far realization has been sluggish, with only around 80 percent of last year'€™s target met.

Meanwhile, recent Finance Ministry data reveal the scale of the challenge facing the government'€™s efforts to increase tax receipts, even after the planned system integration.

By February, tax revenues stood at Rp 124.2 trillion, representing just 9.1 percent of the full-year target of Rp 1.36 quadrillion. The figure is 5 percent lower than at the same point last year.

Popular

Fuel price hike in the cards if budget ‘can’t bear’ oil subsidy

‘Agak Laen: Menyala Pantiku!’ dethrones ‘Avengers: Endgame’ in Indonesia

Literate, independent and abused: Indonesian women’s hidden reality