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Jakarta Post

Tax amnesty yet to net big fish

Prima Wirayani (The Jakarta Post)
Jakarta
Thu, August 25, 2016

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Tax amnesty yet to net big fish President Joko "Jokowi" Widodo (left) makes a remark during a discussion on the tax amnesty program in Surabaya, East Java, on July 15. (ANTARA FOTO/M Risyal Hidayat)

T

he government’s tax amnesty bullets seem to be hitting the wrong targets as most people participating in the program so far are small taxpayers, not those who keep assets worth billions of dollars overseas.

Setyo Utomo, head of the extension and dissemination section at the Tanah Abang 1 tax office in Central Jakarta, said his office held recently held a number of events to promote the tax amnesty program. But it was ordinary people who flocked to the events, not the wealthy or business owners as expected.

Setyo acknowledged that he was surprised small taxpayers actively visited the tax office to seek information about the program. “They’re busy asking what the tax amnesty is. What if they don’t join the program?” he said on Tuesday.

Although the government seems to be missing its primary target — wealthy Indonesians who keep their funds offshore — Setyo said the high participation of ordinary people was encouraging because it would widen the country’s tax base, resulting in more tax payments in the end.

Yulianingsih, head of the Palmerah tax office in West Jakarta, said the 40 to 50 application letters for the amnesty program submitted to her office were mostly from individual taxpayers. Her office has so far received penalty or compensation payments of about Rp 8 billion (US$602,568).

Most of the participants, she added, were private employees and owners of businesses in the area.

The scheme offers tax pardons for Indonesians who declare and repatriate their assets in exchange for relatively low penalty rates between 2 percent and 10 percent from July to next March. The program aims to attract billions of dollars of funds kept overseas by rich Indonesians.

As of Wednesday evening, repatriated assets had reached Rp 1.94 trillion, far from the government’s projection of Rp 1 quadrillion. The total declared and repatriated assets stood at Rp 59.5 trillion while penalty payments amounted to Rp 1.18 trillion, just 0.7 percent of the Rp 165 trillion target.

Finance Ministry data revealed that as of last week, 75.3 percent of participants were individual taxpayers whose declared assets were worth Rp 6.4 billion on average.

Tax offices in West Jakarta, North Jakarta and North Sumatra have received the most applications.

Tax officials earlier expected that tax offices in the affluent areas of South and Central Jakarta would receive more amnesty applications.

Big taxpayers were probably still calculating the value of their assets and preparing documents needed for the program, according to the Center for Indonesia Taxation Analysis’ (CITA) executive director Yustinus Prastowo. They could also be waiting for certainty around investment procedures and instruments, especially for investments in the real sector.

“Up until today we don’t know yet what projects are offered by the government to be invested in,” he said Wednesday. He also noted that small taxpayers seemed to be more active in the tax amnesty program.

“The key is the data the government owns,” he said. “It can push big taxpayers to join the program using the data.”

The government, including President Joko “Jokowi” Widodo, has said it holds data of Indonesians taxpayers with money overseas and has urged them to declare the assets. The data was available to three pairs of eyes only — those of the President, the finance minister and tax office head — Jokowi said when he launched the program on July 1.

Taxation Director General Ken Dwijugiasteadi, however, on Monday denied having such data. Thus, the success of the program has so far relied on small taxpayers’ willingness to participate.

A 52-year-old man who did not wish to be named said he decided to take part in the program after a dissemination event at the Jakarta International Expo venue in Kemayoran, Central Jakarta, which was also attended by the President.

“I joined it because this is my chance to help the government,” he said, while waiting for documents to be verified at the Palmerah tax office.

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