Jakarta – The government is scrambling for a quick plan to plug the gap in state finances after legislators from the House of Representatives stopped deliberations on a draft bill related to a tax amnesty. It now hopes to improve and expand its inspection of recalcitrant individual taxpayers in a bid to double tax revenues this year.
Finance Minister Bambang Brodjonegoro said stern inspection measures would be implemented and would involve at least 4,550 tax officers. Bambang said the measures would be implemented should the government's plan to get extra revenue from its proposed tax amnesty bill be turned down by the House.
"If the [tax amnesty] draft bill is rejected, we will intensify inspections," Bambang told a press briefing on Tuesday, adding that "the inspections will focus more on individual taxpayers."
The government expects the House to soon approve the tax amnesty bill to help boost tax revenues, which are expected to suffer a significant shortage this year due to a predicted fall in corporate income taxes amid the country's economic slowdown.
The proposed bill, which offers a tax rate of between just 1 percent and 3 percent, is expected to lure in billions of US dollars kept abroad by wealthy Indonesians.
Bambang estimates that around Rp 2.7 quadrillion (US$195 billion) worth of assets are kept overseas by wealthy Indonesians and Rp 1.4 quadrillion worth of domestic assets have not been properly reported.
Bambang said the contribution of individual taxpayers was whoppingly small compared to the contribution from non-oil tax revenues, which reached Rp 1.011 quadrillion. "We need to improve this sector. A lot of businesses and individuals still operate and even generate huge gains, yet they never pay taxes," Bambang said.
Out of 129 million people subject to tax, only 27 million people actually pay taxes. Income taxes from individuals currently account for less than 1 percent of total tax revenue.
Newly-installed tax chief Ken Dwijugiasteadi vowed to force wealthy individuals to comply with tax regulations. Ken is seeking to double the Rp 9 trillion in income tax collected from individuals last year.
Ken was inuaurated last week as the new director general of taxation three months after previous tax chief Sigit Pramudito resigned after failing to increase tax revenues by 30 percent.
The hightened inspection procedures on individual taxpayers will be in line with the directorate general's 2015-2019 Strategic Plan, which has emphasized law enforcement in 2016.
In addition to the tax officers, the Finance Ministry will deploy 32,000 personnel to secure the compliance of individual taxpayers and help the government meet this year's target of Rp 1.36 quadrillion in tax revenues. The tax target accounts for around 70 percent of total state revenue.
The ministry hopes to increase the country's tax ratio, which currently stands at only 11 percent, lower than the 13 or 14 percent recorded by its ASEAN peers Singapore, Malaysia and Thailand.
Minister Bambang said that taxes from individuals could help offset the decline in taxes paid by companies due to the slowing economy. "In the more developed countries, individual tax is bigger than corporate tax. To achieve it, we need to increase their level of awareness," he asserted.
The tax office will be supported by the National Intelligence Agency (BIN) and the National Police when dealing with recalcitrant taxpayers. (adt)
Source: http://www.thejakartapost.com/news/2016/03/10/govt-gear-scrutinize-recalcitrant-taxpayers.html