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City to set stronger measures against tax evaders
With trillions of rupiah in tax arrears, the Jakarta administration is planning to implement stronger measures against evaders next year
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span>With trillions of rupiah in tax arrears, the Jakarta administration is planning to implement stronger measures against evaders next year. At worst, tax officials can order the blocking of bank accounts and temporarily detain violators.
The Jakarta Tax and Levy Board (BPRD Jakarta) has revealed a plan to carry out stronger law enforcement in 2020 as it is looking for payment of trillions of rupiah in tax arrears, most of which comes from unpaid vehicle-related taxes.
Owed tax from vehicle owners had reached Rp 2.4 trillion (US$170.70 million) as of Monday, with Rp 1.6 trillion from two- and three-wheeled vehicles while the remainder from four-wheelers.
This year, the tax board is targeting to collect tax revenue of Rp 44.2 trillion, a 17.5 percent increase compared to last year's Rp 38.1 trillion. The tax board said it had collected Rp 27.7 trillion.
The administration received Rp 37.5 trillion in tax revenues last year, or 98.4 percent of the target at that time.
“In 2020, we will enforce the law massively in cooperation with the Jakarta Police traffic unit, the Corruption Eradication Commission [KPK], prosecutors office and other institutions supporting tax collection,” the board head, Faisal Syafruddin, said at City Hall.
He explained the types of "massive" law enforcement would comprise those already being carried out like plastering stickers on taxable objects, going door-to-door issuing warnings to residents and sending bailiffs to collect tax based on a distress warrant.
Other forms or enforcement will include checking vehicle registration certificate (STNK) validation, revoking license plate numbers if the STNK is past its expiry date by two years or more, revoking the business license of owners unwilling to report their business transactions online, and postponement of business license issuance by the Jakarta one-stop integrated service (PTSP).
Other endeavors, considered the last resort, are to block the bank account of tax evaders or temporarily detain them.
For blocking or reopening tax evaders' bank accounts, the tax body would cooperate with Bank Indonesia as the banking authority, Faisal told The Jakarta Post.
He expressed hope the enforcement would be effective in improving taxpayer obedience. He cited the example of plastering stickers on hotels, which had forced the related taxpayers to ask for the sticker to be removed and immediately pay the tax due.
Temporary arrest, aimed at forcing taxpayers to pay the due tax, is carried out by the Finance Ministry’s taxation directorate general.
To enforce this, the Jakarta tax body will cooperate with the police and the Law and Human Rights Ministry’s correctional facilities directorate general.
The tax and levy board’s counseling and information services unit head, Hayatinah, told the Post that the two strongest types of enforcement would be carried out once plastering stickers, delivering a distress warrant, going door-to-door and tax clearing had been attempted.
“In principle, we expect taxpayers to comply and pay their taxes,” she said.
Besides the plan for stronger law enforcement, the board is also waiving fines for tax arrears from Sept. 16 until Dec. 30 for several types of taxation, namely taxes and levies for hotels, entertainment centers, parking, restaurants, ground water, properties and vehicles.
“We call for active taxpayers to make use of the tax relief period so as to avoid administrative sanctions and law enforcement we will carry out in 2020,” Faisal said.
The tax relief is expected to contribute up to Rp 600 billion in revenues.
Center for Indonesia Taxation Analysis (CITA) executive director Yustinus Prastowo said the administration must focus on improving the obedience of taxpayers to pay taxes before the due date by improving the taxation system.
To improve compliance, he said cooperation among institutions and simplification of administrative work were among the efforts needed.
“It is necessary to build an integrated information and technology system that makes people feel their activities are being watched [by the tax office]. Also, there should be integration with related ministries and better tax services,” he said.
Implementing cooperation across institutions was deemed important as Jakarta's policies often became the benchmark to be duplicated in other regions to hamper “redundant and ineffective” efforts in the taxation system, Yustinus said.
Tax research and training services analyst Bawono Kristiaji agreed the proposed law enforcement by the city administration would improve tax obedience, only as long as the administration upheld a strong commitment and implemented the enforcement consistently.
Regarding tax relief, he expressed the opinion that many regional governments had implemented the so-called “tax amnesty” for the last three years.
“Repeated amnesties would only create a situation where taxpayers wait for a similar policy to be released. In other words, if amnesty schemes are applied too often, it would have a negative impact on long-term compliance,” he said.
