STRATEGY TO CATCH TAX DODGERS

Authorities ‘taking hostages’ in bid to make up 600tril rupiah shortfall

IN the Dutch language, “gijzeling” means to take someone hostage. In Indonesia, that is how authorities describe their strategy to deal with tax dodgers, throwing dozens of people in jail as part of a crackdown.

Eight months after the government closed an amnesty programme that gave Indonesians a chance to come clean on their tax affairs, it is taking aggressive action to deal with those who still have not paid up.

Finance Minister Sri Mulyani Indrawati makes no apologies as she races to meet a 1,473 trillion rupiah (RM457 billion) tax revenue target with just two months to go before the end of the financial year.

Where “compliance is very minimal, or there is no cooperation, we will start to do this gijzeling”, said Sri Mulyani in an interview, here.

Taxpayers were given fair warning, including an opportunity to participate in the amnesty, she said.

More than 50 people, including foreign nationals, have been imprisoned since the beginning of the year over unpaid taxes, while hundreds more have been banned from travelling overseas.

The tax office has threatened to seize luxury cars like Ferraris and jet-setters returning home with Gucci and Prada handbags have been stopped by Customs officials at airports and questioned about whether their purchases abroad have been properly declared.

Yon Arsal, head of compliance and revenue at the Tax DirectorGeneral’s office, said his officers were doubling down on efforts to make up a shortfall of almost 600 trillion rupiah for this year.

As of September 30, they had collected 60 per cent, or 876 trillion rupiah, of the target. Excluding flows from the amnesty, tax receipts were up about 12 per cent compared to the same period last year, he said.

“We still have two months left and we are really focusing on compliance activities. It is quite challenging for us. I won’t say that it is an easy jump.”

Indonesia has a long-standing problem with tax compliance.

In a country of 260 million people, only about 16 million regis- tered tax payers were required to submit returns this year. Of those, only 11.3 million 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 to 14 per cent by 2021. 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 Organisation for Economic Cooperation and Development.

In the first 10 months of the year, Indonesia temporarily jailed 53 people for failing to pay arrears, said the Tax DirectorateGeneral’s office. Bloomberg