TEMPO.CO, Jakarta - Tax Director-General's Regulation No. 11/PJ/2016 on the Implementation of the Tax Amnesty Law offered some relief to confused taxpayers. The new regulation, among others, exempts from the program those who earn less than Rp4.5million a month.
However, being less powerful than the law, this regulation alone is not sufficient to offer legal protection to all taxpayers. It cannot possibly overwrite the law by changing the definition of different taxpayers in the amnesty policy.
If the government intends to change or clarify the scope of the policy, it should do so through the revision of the Tax Amnesty Law No. 11/2016. The new regulation is nothing more than a 'fire extinguisher' to douse the public unrest brought on by the program.
The emergence of the new regulation also indicates the clumsy implementation of the law. Under the new regulation, heirs are not required to report for the program as long as their inherited assets are reported in the annual tax return (SPT). Even if they have not reported these assets, all they need to do is to revise the SPT. To start with, this provision should have been included in the explanation of the amnesty law. Or at least it should be stipulated in the Finance Minister's Tax Amnesty Policy Implementation Regulation No. 118/2016.
If the government had been transparent from the outset, unnecessary public panic could have been avoided. It should have clearly stated that the law is applicable not only to those who stash money overseas but also to those who own assets in the country. Law No. 11/2016 classifies taxpayers eligible for the amnesty are those who file their annual tax returns.
Confusion occurred from the time President Joko Widodo announced that the program would target trillions of rupiah hidden abroad. The government even boasted that it had the data on 6,000 overseas accounts owned by Indonesians, worth Rp11.5 quadrillion in total.
If the data is valid, then it should be the priority of the tax directorate-general to track down the money of major tax evaders. After all, one of the program's objectives is to repatriate the money so as to boost domestic liquidity. The government also hoped to contain the budget deficit with the repatriated funds.
Regrettably, much of this anticipated money has yet to return. The total incoming funds as of last week only amounted to one-seventh of the total declared assets of Rp195 trillion. Of that amount, only Rp12.3 trillion are be repatriated. The 'fines' being paid total just Rp4.41 trillion, a far cry from the target of Rp165 trillion.
The government must ensure that the law sets its target on the overseas assets of major tax evaders. It should not cause the public to assume that the budget deficit is forcing the tax amnesty to go after the middle- and lower-income earners. (*)
Read the full story in this week's edition of Tempo English Magazine
