The amount of money stashed in overseas banks is believed to be huge, and its repatriation would help Indonesia carry out its economic development independently without the need to increase its external debts.
According to Executive Director of the Center for Indonesia Taxation Analysis Yustinus Prastowo, the repatriation of the assets would help Indonesia become more independent in developing its economy ahead.
In addition, it could further help the country if tax dodgers at home, who are in large numbers, could also pay their taxes. Therefore, the tax amnesty should also target errant tax payers at home.
The number of corporate bodies in Indonesia reaches some five thousand companies, but only some two thousand of them are registered with the directorate general of taxation. Of these registered companies, only some 500 regularly pay taxes.
Legislator Heri Gunawan of Commission XI on Financial Affairs of the DPR stated that the tax amnesty will increase state revenues from the tax sector and create reforms to ensure efficient tax governance.
Gunawan pointed out that there were some 15 million businesses in Indonesia, including in the formal sector, but only some 26 percent of them paid taxes.
He, therefore, suggested that careful studies should be conducted with regard to the tax amnesty bill, particularly concerning its repatriation scheme, calculation of its contribution to the state revenues, and its asset reporting system in the future.
Therefore, Commission XI of the House wants that the Tax Amnesty Bill should be first discussed with President Joko Widodo as this legal basis was strategic in increasing the states revenues.
"We received the draft law on April 12, while the Houses current sitting session will end on April 29. We need time to first review it with the House Consultative Body (Bamus) and consult the president regarding the results," Heri noted.
According to the Indonesian Employers Association (Apindo), the Tax Amnesty Law should target the underground economy in the country as well and not merely those overseas.
"The tax ratio in Indonesia should have reached 16 percent, but, so far, it was recorded at only 10 to 11 percent as there are several firms operating underground and not paying their taxes," Prijo Handojo, Apindo chairman for taxation affairs, remarked in Jakarta on Wednesday (April 13).
He said the tax amnesty should not only be imposed on businesses, which kept their assets abroad but also on domestic tax evaders, including all players operating in illegal markets.
Prijo said the government should crack down upon players in illegal markets and other negligent taxpayers at home.
The government should offer protection to obedient taxpayers, so that they would not be hassled by tax officials.
"As many as 4.5 million businesses have never paid taxes. This number only includes their firms, though excluding their employees, which could reach over 100 million, who have evaded taxes. Taxes from these defaulters can cover 98 percent of the tax revenue target," noted Prijo.
Yustinus stated that the tax amnesty should also be oriented towards the informal economic sector.
According to the World Bank, some 18 percent of the gross domestic product came from the informal sector, such as the small medium enterprises (SMEs).
"SME players have the opportunity to take part (in economic development). They do not have to harbor concerns as they can have access to the incentives offered by the government. They can enjoy liquidity and interest rate cuts. Tax amnesty is not our objective but a means to develop the countrys new economic system," remarked Yustinus.
Therefore, Apindo asked the government to focus on settling the tax amnesty issue, which is still in a draft law form at the House of Representatives so that it can be immediately implemented.
"It is time for the government to concentrate on settling the issue because according to us it is very important," Apindos General Chairman, Haryadi Sukamdani said after a discussion at the office of the Coordinating Minister for Economic Affairs on Thursday (April 7).
He said it was time for tax payers to open up with regards to their wealth, especially abroad, in the form of cash, shares or other assets. Even if the assets are not withdrawn, at least the government can calculate and record the value of the whole assets of the tax payers, he said.
"For us what is important is their participation. They must be convinced and must be made to feel they are not driven into a batman trap," he said.
He also underlined the importance of the momentum to settle the tax amnesty issue following the spread of "Panama Papers" clearly disclosing efforts by thousands of individuals and companies to avoid tax.
Although the method of setting up fictitious companies has been used by some individuals in the Panama Papers to keep their wealth, it is not a wrong thing that suspicion remains that the funds may possibly be used to fund illegal activities, such as narcotic drugs and arms business and others.
"Basically, they do not want to have their wealth known. Apindo in this case cannot do anything as it has to do with ones rights," he said.
The Deputy Chairman of the National Economic and Industrial Committee (KEIN), Arif Budimanta, proposed that the government should use the Panama Papers as part of its source of information.
According to reports, millions of documents of a law firm Mossack Fonseca of Panama on financial scandals have been leaked to the public.
The Panama Papers included 140 politicians comprising 12 state leaders, celebrities and sport starts. A number of Indonesian business leaders and retired officials are mentioned in the documents.(*)
Reporter: Andi Abdussalam
Editor: Heru Purwanto
Copyright © ANTARA 2016
