Finance Minister Sri Mulyani Indrawati (2nd left) briefs the press on State Budget issues.

JAKARTA (TheInsiderStories) – Eight months after the government completed an amnesty program that allowed tax-dodging Indonesians an opportunity to come clean on their back taxes, the government is taking aggressive action to deal with those whom they accuse of not having paid up.

Finance Minister Sri Mulyani Indrawati makes no apologies as she races to meet a Rp 1,473 trillion (US$108 billion ) tax revenue target with just two months to go before the end of the financial year.

She has called for closer cooperation between the Directorate General of Taxes and the Directorate General of Customs and Excise as part of the government’s efforts to boost tax collections.

“We have to admit that in doing our jobs, there is more room for further cooperation,” Sri Mulyani said in Jakarta on Wednesday (15/11).

The Minister stated that closer cooperation between the two directorates will make it easier for taxpayers to comply with their obligations, which will ultimately improve tax compliance and collection.

“The tax office and Customs and Excise are busy with their own work, but they forget that working together will reduce the burden and improve results,” She pointedly observed.

Collaboration between the two directorates has so far allowed trading companies to use their tax identification numbers, as a valid identification for customs purposes. This means that business players are no longer required to apply for customs identification numbers.

The minister said she wants more than just a single identity number for taxpayers. She wants real-time data collection – which includes trading companies’ complete import and export data – shared between the two directorates, to improve tax compliance, as it will reduce the amount of time and effort currently required to submit separate reports to different government institutions.

“All of this is not intended to make life more difficult, but easier. Our goal is not to rule but to serve,” she said.

Calming Down the Taxpayers

The Ministry of Finance will release a new regulation this week to ensure tax amnesty participants are exempted from income tax when transferring ownership of their houses or land, as part of the Ministry’s efforts to maintain taxpayers’ trust after the amnesty program.

“We don’t want to make any fuss in society. We want to offer assurances to those who participate in the tax amnesty program,” said the former World Bank director.

The new Finance Ministry regulation — which is scheduled to be released on Friday — will be a revision of existing Regulation coded 141/PMK.03/2016 and clauses will be added to reassure tax amnesty participants that they will not have income tax levied when transferring their asset ownership. When carrying out the transfer process at the National Land Agency, displaying a copy of tax amnesty program participation will be sufficient.

The government has collected Rp 991.2 trillion in taxes and excise duties from January to October, or 67.3 percent of the Rp 1.47 quadrillion targeted in the 2017 revised State Budget.

Tax revenue and compliance director Yon Arsal at the Directorate General of Taxation said that the tax office was still optimistic that it would be able to meet the targeted tax collection. “We do not talk about shortfalls,” he added.

Indonesia has had a long-standing issue with tax compliance. In a country of 260 million people, only about 16 million registered taxpayers were required to submit returns this year. Of those, only 11.3 million people have actually paid their dues, official figures show.

The country also has one of the lowest tax ratios in the region. The government is forecasting tax revenue of 11 per cent of gross domestic product this year and expects that to rise to 13-14 per cent by 2021, down from a previous goal of 16 per cent by 2019.

That compares with 17 per cent in the Philippines, 15 per cent in Malaysia and an average of about 34 per cent for countries in the Organization for Economic Co-operation and Development.

In the first 10 months of the year, Indonesia temporarily incarcerated 53 people for failing to pay arrears, the Tax Directorate-General’s office said, without releasing any names.

Forty-five of those have since been released, after paying up Rp 230 billion, while eight remain behind bars, owing a collective Rp 41 billion. Authorities are looking to detain another 23 people who owe a total of Rp1.8 trillion.

Written by Elisa Valenta, Email: elisa.valenta@theinsiderstories.com

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