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Dozens of tax evaders to be imprisoned


The government will take dozens of tax evaders into debtors prison — nine this month — as it gets serious about enforcing rules amid plans to significantly raise tax collection.

The move, called gijzeling or hostage in literal Dutch translation, will be actively enforced this year for taxpayers evading taxes worth more than Rp 100 million (US$8,000), as part of the Finance Ministry’s efforts to meet its tax collection target of Rp 1.3 quadrillion, which is 40 percent higher than last year’s realization — excluding customs and excise — officials said.

The nine tax evaders to be imprisoned in a special prison this month consist of one individual taxpayer and another eight working in five institutions who have intentionally evaded their taxes worth a total of Rp 13.6 billion. The five institutions operate in trading in a number of areas in East Java, Central Java, South Sumatra and Jakarta, according to director general of audit and tax collection Dadang Suwarna.

Besides the nine evaders, the tax directorate also plans to take 40 taxpayers, comprising 46 individuals, into the debtors prison as they have evaded taxes with a total value of around Rp 1.37 trillion.

“We hope to obtain the permit soon [to take in these individuals]”, the Finance Ministry’s acting director general of taxation, Mardiasmo, said on Tuesday, adding that they would not be released until they fulfilled their obligation to pay their taxes.

Taking individuals hostage for tax debts is not new practice in the country as the legal grounds for it have existed since the 1960s and reinforced in the 2000s, since then becoming a tool to get tough on tax evaders.

The Finance Ministry will be going all-out to collect taxes this year as lower state revenues could hinder President Joko “Jokowi” Widodo’s development programs that focus on the infrastructure, maritime and agriculture sectors and are expected to bolster growth by 7 percent during his term from the current 5 percent.

Travel bans would also be enforced to prevent tax evaders from leaving the country, Mardiasmo said.

The tax office has cooperated with immigration to ban 479 institutional taxpayers and 89 individual taxpayers from flying overseas, the majority of whom are Indonesians while the rest are foreigners from other countries in Asia, Australia, Europe and the US.

Ah Maftuchan, a researcher with the Center for Welfare Studies Prakarsa, lauded the directorate’s move, saying that it could help the government achieve its tax-collection target.

“Besides taking the actions, the government may also increase the number of taxpayers. We currently have only around 24 million institutional and individual taxpayers from the full potential of 60 million,” he told The Jakarta Post.

Of the 28 million taxpayer number (NPWP) holders in 2013, only 1.7 million paid their taxes appropriately, Finance Minister Bambang Brodjonegoro said, adding that the government would be going all-out to collect taxes.

“I apologize in advance to you now because we will deploy more tax officers. Individual tax revenue amounting to Rp 5 trillion is not enough,” he told 700 investors, including 150 foreign ones.

About 4,000 foreign direct investors have yet to pay their taxes and only Rp 4.7 trillion of the total Rp 900 trillion in taxes owed last year was collected from individuals.

Budget allocations for the Finance Ministry will be increased by Rp 5.5 trillion to reform the notoriously corrupt tax office: reward and penalty systems will be enforced and information technologies will be modernized, among other measures.

The tax office has also been cracking down on its personnel involved in the actions. As of Monday, the tax office has sanctioned 29 of its employees after sanctioning around 300 staffers last year, varying from warnings to job termination, depending on the level of their involvement.

– See more at: http://www.thejakartapost.com/news/2015/01/28/dozens-tax-evaders-be-imprisoned.html#sthash.ryXmiAMv.dpuf

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