Indonesia tax amnesty nets $330 bln - now for reform
Southeast
Asia's biggest economy this month is winding up one of world's most successful
tax amnesties, with at least 745,000 taxpayers declaring more than $330 billion
of assets so far.
President
Joko Widodo has cited higher tax revenue as the key to boosting infrastructure
spending and growth. But if the amnesty is to avoid being just a one-off
windfall, Indonesia needs to improve a tax collection ratio well below many of
its peers, international agencies and local officials have said.
To
that end, Indonesia's
finance minister Sri Mulyani Indrawati has set up a special tax reform team to
boost collection. It faces an immense task in a country where tens of millions
of people - both the wealthy and the poor - remain outside the tax system.
Parliament
is considering draft legislation that would overhaul an institution the public
views as one of Indonesia's most corrupt, according to global corruption
watchdog Transparency International.
"People
don't pay taxes because they believe they won't get caught," said
Darussalam (like many Indonesians, he goes by one name), a partner at
consultancy Danny Darussalam Tax Centre.
The
amnesty has provided the government with more revenue than similar plans in
countries such as India, Chile, Italy or South Africa, Indrawati said.
The
amnesty has been criticized for benefiting mostly the rich. The World Bank
blames poor tax compliance amongst high income earners in Indonesia for
hampering poverty reduction and maintaining inequality. The richest one percent
of Indonesia's 250 million people control nearly half the wealth, charity
organization Oxfam said.
Tax reform team
The
tax bureau as of 2016 employed about 38,000 people to collect taxes from a
workforce of 118.41 million. Less than a third of the workforce is registered
at the tax office and even fewer file annual tax reports.
A
visit to the tax office in Jakarta provides a window into the challenges the
government faces.
Tax
inspector Jeffry Martino sometimes works a 12-hour day just to keep tabs on a
small portion of the hundreds of companies under his watch.
He
has 661 taxpayers under his watch, but focuses on the biggest 100 companies
that contribute the most to his target of collecting 495 billion rupiah ($37.02
million) this year.
"We
are the spearhead of state revenue collection," said Martino, at his
temporary office with a misfiring air conditioner.
His
job would be easier if tax auditors had far fewer clients and more access to
third-party data, such as banking information, he said.
He
might get that wish under proposed legislation to reform the tax system.
The
draft in Indonesia's parliament calls for giving tax collectors wider access to
bank data in line with Indonesia's pledge to join a global effort to share
tax-related financial data.
"Hunting in the zoo"
Andreas
Eddy Susetyo, a member of the commission overseeing the bill, said it may take
up to a year to finish discussions and even then progress may be interrupted
because politicians would be distracted by campaigning ahead of 2019 elections.
Widodo
has vowed to bypass parliament if necessary by issuing an emergency regulation
before mid-year giving the tax office access to bank data.
In
the meantime, Finance Minister Indrawati's tax reform team aims to increase the
tax ratio to 15 percent of GDP in 2020 from about 11 percent now.
That
compares with a global average of 14.8 percent in 2014, according to the World
Bank. The team, consisting of finance ministry officials and advisers from the
World Bank and other agencies, intends to act as a brainstorming think-tank to
push through reforms of everything from the tax office's business model to
tariffs.
Hestu
Yoga Saksama, a tax office spokesman, said the team would redeploy thousands of
tax officers to auditing once the amnesty period ends this month.
"We are preparing
to take legal action against people we found non-compliant but have not taken
part in the amnesty," said Saksama, describing it as a potential quick
win.
But
the World Bank still estimates Indonesia will miss its 2017 total revenue
target by 70 trillion rupiah ($5.23 billion), while the tax ratio will likely
stay below 11 percent of GDP.
Rosan
Roslani, chairman of Indonesia's chamber of commerce and industry, said that
the tax office should not just monitor those already in the system, but go
after tax evaders.
"When
our tax base is low, there will be some 'hunting in the zoo' because you only
have so many people in the system," said Roeslani, who is also advising
the reform team. He advocates creating an Indonesian social security number
system, similar to that of the United States, to help boost the number of taxpayers.
($1
= 13,385.0000 rupiah)
Source
: https://www.cnbc.com/2017/03/21/indonesia-tax-amnesty-nets-330-bln--now-for-reform.html
REVIEW :
The article
mainly talks about the goverment program, Tax Amnesty. In the article there are contain what is a tax amnesty, what are the benefits of tax amnesty, the impacts of the policy
and what is the reason the government imposed a tax amnesty. According to the latest version of
the bill, tax amnesty is a free-pass for taxpayers to disclose incomplete or
unreported income in their previous tax periods without having to face prosecution by the tax court or pay
any penalty. During this period, the
taxpayers only need to pay a special tax in exchange for a government pardon on
their tax liability.
In my opinion, the article is very good
because it is about current situation that exist in Indonesia. The article presents many facts and information
that can be take and hopefully after knowing it, we can become more
tax-conscious. Because the tax is what we pay, and for our benefit as well. As we know, many
taxpayers do not want to pay taxes. Even wealthy people who have big incomes
hide their wealth abroad because if they live abroad more than 6 months, they
will be subject to foreign taxes subject to 20% tax deductions for any income.
Whereas if they choose to be subject to domestic taxes, the greater their
income are, the greater the tax deductions imposed. In Indonesia alone for income more
than 500 million, will be taxed by 30%, so many billionaires choose to hide
their property abroad. Thus, state revenues from taxes are still very few and
do not match expectations. So finally, the government imposes tax amnesty in
order to increase tax revenue, increases taxpayers' compliance rate and pull
more offshore assets back into the country.
For me, I partly
agree and disagree. Why I agree about the tax amnesty, because it has many
advantages for the country such Increase state revenue.
It is certain that the tax amnesty of state revenue from tax increases. The
ransom paid by the taxpayer on his unreported property becomes an additional
tax revenue for the state. The more taxpayers pay, the development will go well
and the welfare of the people can be obtained. In addition, Tax Amnesty is
also useful for improving and economic growth as well as awareness and
compliance for tax-conscious people. But on the other hand, I disagree with tax amnesty because
several reason. First, tax amnesty is very unfair to those who
have been obedient to pay taxes. Because in tax amnesty, all
administrative sanctions and criminal sanctions regarding the taxpayer is
abolished. Both sanctions due to previous tax problems and sanctions on newly
reported tax liability. Nor will it be subject to tax audits and
investigations, so there may be manipulation of data that causes taxes paid to
be not payed as it should be. Overall, I believe that government policy has been there many
considerations and certainly useful for this nation. And the policy is also
prioritized for the welfare of the people. So what we should do is support the
program by becoming a tax-conscious citizen so that the revenue of the acquired
state will increase.
Above are my review on the article. The review
belongs to me, Erfina Dita Nirmala.
Hope it can be helpful.
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