No Mercy for Shady Tax Consultants: Finance Minister

The Jakarta Globe
December 29, 2016 | 9:40 pm
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Finance Minister Sri Mulyani Indrawati and the director general of taxation, Ken Dwijugiasteadi, in conversation during the minister's impromptu visit to the tax office in Jakarta on Wednesday (28/12). (JG Photo/Tabita)
Finance Minister Sri Mulyani Indrawati and the director general of taxation, Ken Dwijugiasteadi, in conversation during the minister's impromptu visit to the tax office in Jakarta on Wednesday (28/12). (JG Photo/Tabita)

Jakarta. Finance Minister Sri Mulyani Indrawati said she will clamp down on tax consultants involved in tax evasion, as they are currently inundated by clients seeking their assistance to join the government's tax amnesty program.

"I've asked Mr. Ken [Dwijugiasteadi, the director general of taxes] to check out the tax identification numbers a many consultants," she told reporters on Wednesday (28/12).

"The consultants are cashing in big from the tax amnesty program. I've seen one who reported up to 30 asset declaration letters," she said.

Sri Mulyani made the comment during an impromptu visit to the headquarters of the Directorate General of Taxation in Jakarta, where she found employees from several tax consultancies submitting their clients' wealth reports.

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"It's common practice in industrial countries; even individual taxpayers there use the services of tax consultants," she said. "But please don't try to lower [the value of taxpayers' assets] so they can receive the 0.5 percent tariff."

The government offers a 3 percent tariff for taxpayers who come clean on previously unreported assets abroad and agree to repatriate them. The government also offers a 0.5 percent tariff for small and medium enterprises with less that Rp 10 billion ($742,000) in total assets.

More than 170,000 taxpayers have joined the second part of the tax amnesty program and around 70 percent of them are small and medium enterprises, according to Hestu Yoga Saksama, director of counseling, service and public relations at the tax office.

The number of participants in the tax amnesty program, which started in July this year, has reached 563,000 by Thursday.

Tax director general Ken Dwijugiasteadi reported to the minister during her visit that the amnesty process is "under control" and that no emergency measures will be taken to address the lower-than-expected number of participants.

"Most of the high-wealth [individuals] have joined the first part of the tax amnesty, so the additional state revenue from the program will not be as high," Sri Mulyani said.

Despite the slower progress, the minister said she still "hopes for the best" and that each regional tax office has already prepared a plan to start the third part of the tax amnesty program in a bid to achieve a steady result.

So far, the government has collected Rp 106 trillion in total tax amnesty-related penalties – which include the 2 percent and 3 percent tariffs, payments of preliminary evidence from tax investigations and tax due payments – according to tax office data.

Taxpayers have also declared Rp 4,193.1 trillion in previously unreported assets and repatriated Rp 141.3 trillion so far.

The government has set a target of Rp 4,000 trillion in declared assets, Rp 1,000 trillion in repatriated assets and Rp 165 trillion in additional tax revenue.

"If the results at the end of the second part have not met our expectations, then I will step up the campaign in the last part," the minister said.

The tax office will not only focus on tax consultants in the last part of the tax amnesty program, which starts in January, Sri Mulyani said. Notaries, doctors, tax consultants, lawyers, architects, accountants, governors and executives of state-owned companies will be targeted next.

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