Jakarta. The Directorate General of Taxation has urged taxpayers to declare previously unreported assets, following the release this week of a regulation that will exempt them from any penalties if they comply.
The Finance Ministry regulation, which became effective on Monday (20/11), is the government's answer to complaints by tax amnesty participants, who discovered that they could still be required to pay additional tax, or even face criminal charges, when transferring title of ownership of their assets from surrogates to themselves, despite having declared the assets under the amnesty program.
Finance Minister Sri Mulyani Indrawati earlier said the problem often arose due to a mismatch between the details of assets participants listed under the tax amnesty program, and the reality tax officials found when scrutinizing such assets. The minister said many of these mismatches were likely due to honest mistakes.
To clean up this mess, the government revised the regulation to exempt taxpayers from penalties if they declare unreported assets. This stipulation also extends to taxpayers who did not join the amnesty program but are still willing to come clean.
"We designed it to boost self-compliance," tax office spokesman Hestu Yoga Saksama told reporters on Wednesday. "Taxpayers should use this opportunity immediately."
While there is no deadline for the declaration of hidden assets, the tax office has been ramping up scrutiny of taxpayers who did not join tax amnesty program.
The office has launched audits of 811 tax cases since September. Seven of the 68 taxpayers audited so far were found to be hiding a total of Rp 5.7 billion ($422,000) in hidden assets.
Under a government regulation that became effective in September, any assets that were unreported between Jan. 1, 1985 and Dec. 31, 2015 would be treated as additional income and be subject to a tax rate of up to 30 percent.
The tax base and tax compliance are still low in Indonesia, limiting the government's ability to fund development and distribution programs. Indonesia only has 32.9 million taxpayers out of a total population of more than 260 million. Of those, 20.2 million were required to file annual tax returns last year, while only 12.7 million complied.
Hestu said the ministerial regulation could increase tax collection this year but it is not the ultimate goal.
"If we wanted to boost collection, we would have set a deadline, but we did not," he said.
The government had collected Rp 858 trillion in taxes, including income tax from the oil and gas sector but excluding proceeds from customs and excise, as of the end of October. This is only 67 percent of the Rp 1,284 trillion target set in the revised 2017 state budget.