Indonesia Tax Authorities Renew Compliance Efforts
Indonesia
Indonesia’s Director General of Tax issued Circular Letter No. SE-60/PJ/20101, which instructs each tax office to collect and complete at least 1,000 taxpayers’ profiles in its database. Once these profiles are collated in the central database, the tax authorities will have a “better” benchmark with various classifications, which would be useful to gauge taxpayers’ level of compliance. The information will be shared throughout the whole archipelago through a nationwide taxpayer network system.
From the data collected, the tax offices will analyze the reasonableness of income reported by taxpayers for the years 2007, 2008, and 2009 (as the “profiling” initiative started in 2007). A gap analysis will be made by comparing a taxpayer’s tax potential and the amount of tax already collected, either through withholding or self-payment.
The final instruction of the circular letter is for each tax office to submit a monthly report of their findings to the Directorate General of Tax (DGT). It is foreseen that the next step will be an inquiry to those taxpayers whose tax payments are lower than the calculated tax potential.
So far, Badora One and Badora Two tax offices have started contacting individuals to collect their personal and financial data. The requested data includes:
• copy of taxpayer’s latest work permit (IMTA);
• copy of taxpayer’s and accompanying family’s latest passports (identity page);
• copy of taxpayer’s and accompanying family’s latest stay permits (KITAS);
• copy of taxpayer’s family certificate (SKSKP);
• taxpayer’s and accompanying family’s photographs;
• detailed list of monthly cost of living allowance;
• the taxpayer’s monthly salary and the number of the bank account into which the salary is deposited;
• detailed list of assets, e.g., bank accounts, shares owned (including the name of the company), type and location of properties;
• detailed list of liabilities, e.g., balance owing and the address of the lender;
• if claiming a foreign tax credit, proof of tax payment overseas (cheque or remittance slip);
• confirmation of office address and current position held;
• confirmation of home address;
• confirmation on motor vehicle or luxury yacht owned.
KPMG Note
The above enquiry is meant to complete the tax information required for individual taxpayers. However, the tax officer seems to request more information or documents than in a tax audit.
Tax revenue as of the end of December reached IDR 556.77 trillion (US$59.57 billion), down by 0.93 percent from IDR 571.1 trillion in 2008, equivalent to 98 percent of the target set by the government. As SBY’s3 government is facing soaring budget deficits, the DGT has therefore increased its focus on wealthy individuals, especially for those working in special industries.
To quote President Susilo Bambang Yudhoyono’s statement when presenting the 2010 state budget bill to the plenary session of the House of Representative last year, “More aggressive tax collection and improved administration within the tax office will contribute to the increase in tax revenue. This will also compensate any shortfalls that result from slower economic growth. Lower dividends from state-owned enterprises due to lower profits would put a drag on non-tax government revenue next year.”
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