Indonesian tax officials told to work harder on amnesty

Indonesia’s House of Representatives’ Speaker this week called on government officials to increase promotion of the tax amnesty programme after a disappointing first month of the long-awaited reform.

The tax office has so far only managed to attract a fraction of the repatriated assets target, despite official tours around the country and abroad to raise awareness and increase participation.

“We are concerned with the performance of the Directorate General for Tax,” House Speaker and Golkar lawmaker Ade Komarudin told reporters.

“The promotion has not widely reached out to all the elements of businesspeople. We call on tax officials to work harder.”

The House passed the Bill turning tax amnesty into law late last month, with the programme running until March next year. The law pardons tax crimes relating to back taxes and fines, as long as the taxpayer declares hidden assets and agrees to pay special fees to the government. “We also call on businesspeople to use this opportunity, which is only provided once,” Mr Ade said.

The government’s target for the programme, which offers low rates for taxpayers declaring previously unreported wealth, is collection of 165 trillion rupiah (S$16.85 billion) of revenue by the end of December.

In addition, the government hopes that more than US$70 billion (S$94 billion) of assets overseas will return home under the amnesty. The amnesty lasts only until March, but people joining it pay the lowest rates if they enter by Sept 30.

According to the Finance Ministry, as of last Thursday afternoon, a month after the programme started, revenue from the amnesty was 679 billion rupiah, or just 0.4 per cent of the programme target.

The ministry said 5,613 taxpayers had declared 33.3 trillion rupiah of assets, about 80 per cent of which were already in Indonesia. So far, US$91 million of offshore assets have been repatriated.

“These are still very small compared with our set targets,” said Finance Minister Sri Mulyani Indrawati in a press conference on Monday.

Giving an update on the ministry’s flagship programme, Ms Sri Mulyani said that of the total declared assets, about US$2.7 billion was declared in Indonesia, while the remaining was declared overseas. Ms Sri Mulyani added that 82.6 per cent of assets declared were dominated by individual taxpayers.

She believed that the figures will rise next month, because big taxpayers may have then completed their legal paperwork to participate in the programme.

Indonesians can pay the lowest rate of 2 per cent if they enter by Sept 30. Under current law, the punishment that tax evaders will face after the tax amnesty is a 400 per cent penalty on amounts due.

Indonesia’s tax revenue is under pressure from weak commodity prices that dented export earnings and companies’ profit.

Ms Sri Mulyani has cut this year’s budget by US$10 billion to ensure the fiscal deficit stays below the 3 per cent of GDP legal limit.

Last week, she warned tax dodgers that the tax amnesty programme was their last opportunity to have all of their “sins deleted” or face “hell” afterwards.

To people who owe taxes, she offered a choice: “Basically you have heaven and hell. This is the opportunity for you to go to heaven with only 2 per cent (tax penalty) and all of your sins have been deleted.”

“If you’re not using the opportunity this time, I’m not going to play around,” she added, warning wealthy business owners that she had “a lot” of video of them admitting they do not pay taxes. THE JAKARTA GLOBE