Finance Minister Sri Mulyani Indrawati, center, attending a press conference on Wednesday (03/05). (Photo courtesy of the Directorate General of Customs and Excise)

Finance Ministry Foils Attempts by Firms to Claim Fraudulent Tax Refunds


MAY 03, 2017

Jakarta. The Ministry of Finance revealed on Wednesday (03/05) that it foiled an attempt last week by a local textile company to claim a tax refund by falsely reporting the value of its exports, raising concern that such cases may be rife.

The announcement was based on findings by the ministry's Directorate General of Customs and Excise, which has worked with several state institutions, including the Directorate General of Taxation and the Financial Transaction Reports and Analysis Center (PPATK) to investigate the case.

Two suspects, identified only by the initials F.L. and B.S., were arrested and the authorities have seized 16 bank accounts, land and buildings, machinery, apartments and an insurance policy.

"Rest assured, we will check their tax reports for previous years. Especially if they claimed tax refunds," Finance Minister Sri Mulyani Indrawati said.

The Bandung, West Java-based company, identified by the initials S.P.L., said in its export declaration to the Directorate General of Customs and Excise that it planned to export 4,038 rolls of textile products. However, officials later discovered that the company only exported 583 rolls.

The company's actions could have cost the government at least Rp 118 billion ($8.9million), if it went undetected.

"What they did was an attempt to break into the state coffers," the minister told reporters.

By law, companies can request refunds for value-added tax on goods they have yet to produce, but they must prove that they do not have any tax arrears and produce audited financial reports for three consecutive years. They must also not have been charged with tax-related crimes for at least the preceding five years.

Taxpayers received a total of Rp 101 trillion in tax refunds last year, up 6.3 percent compared to the year earlier. This was equivalent to 8 percent of the total tax revenue of Rp 1,249.5 trillion, collected in 2016.

Besides this case, the Directorate General of Customs and Excise foiled another attempt by a company, identified by the initials L.H.D, to fraudulently claim a tax refund in November last year.

The company claimed that it exported curtains, but it was later discovered that it only exported water in cloth-bundled plastic containers.

In yet another case, a Bogor, West Java-based company, identified by the initials W.S., transported five truckloads of textiles and textile products – destined for export – from a company identified by the initials K.B. However, the products were offloaded in Pondok Gede in Bekasi, West Java, instead of being exported.

Customs and excise director general Heru Pambudi said 465 smuggling cases have already been registered in Indonesia in the first four months of this year, compared with a total of 591 last year and 451 in 2015.