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Tax DG Robert Pakpahan: Tax Targets Are Hard to Achieve
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Tuesday, 30 January, 2018 | 20:34 WIB
Tax DG Robert Pakpahan: Tax Targets Are Hard to Achieve

TEMPO.CO, Jakarta - THE Taxation Directorate-General (DJP) must work extra hard this year to meet the 2018 state budget`s target of Rp1.4 trillion in tax revenues, up 10.9 percent from the previous year. Although Robert Pakpahan, recently appointed Taxation Director-General, acknowledged it would be a tall order to fill, he is still optimistic that it can be achieved. 

Despite last year's missed target only 89.7percent, or Rp1.2 trillion was collected the tax revenues still grew significantly at 4.08 percent. "It could serve as capital for this year," says Robert, 58. 

The taxation directorate-general will continue the programs initiated last year such as tax incentive programs, namely tax holidays and tax allowances. The finance ministry has tasked the taxation directorate-general with evaluating the processes of the two incentive programs with the view to make them more accessible to qualified investors. "The minister stressed that tax incentives are meant to boost investment instead of hindering that process," said Robert, who previously served as director-general of funding and risk management. 

Three weeks ago, accompanied by Training, Service and Public Relations Director Hestu Yoga Saksama, Robert sat down with Tempo’s Angelina Anjar Sawitri, Linda Trianita and Praga Utama in his office at the Taxation Directorate-General Headquarters on the 5th floor of the Mar’ie Muhammad Building in South Jakarta. He discussed a variety of issues, from a new information technology system for taxation, e-commerce taxes to his policies in this political year. Excerpts:

What caused the last year’s tax revenue target to be missed?

Last year’s revenue growth compared to 2016’s was indeed only four percent. But if the deposits derived from the tax amnesty and asset revaluation are excluded, the growth reached around 16 percent. Other revenues which are not related to the tax amnesty, such as value added tax (VAT), also grew by 16 percent. That can become capital for this year. This year’s tax target, compared to the tax realization, did jump 23 percent. But, if we can maintain this year’s revenue growth, we only need to chase an additional seven percent.

Isn’t this year’s tax target too high?

The 23 percent increase is indeed quite a challenge for us. It’s going to be tough. But last year’s decent growth gives us a great foothold to push this year’s growth. Hopefully, albeit being a tall order, with extra effort, the target can still be met.

How was the target calculated?

Using macro assumptions. With this year’s targets of 5.4 percent for economic growth and 3.5 percent for inflation, the national income is assumed to rise around nine percent, which is the combination of the two. If these targets are achieved, automatically the nine percent tax revenue growth target can be achieved.

Are the tax incentive programs one way to boost revenues?

Currently, there are tax incentive programs such as tax holiday and tax allowance. We haven’t issued new regulations yet. Madam Minister (Finance Minister Sri Mulyani Indrawati) tasked us to evaluate the process of the incentive programs so that they are more accessible to qualified investors. She stressed that incentive programs should help boost investment instead of delaying it.

Do the programs need to be evaluated because they are not attractive enough?

That instruction came from President Joko Widodo during a cabinet meeting. The President expects that whatever we do will boost economic growth.

Have investors expressed interest in the tax incentives so far?

There are always new investments.

Yoga Saksama: As of now, tax allowance has been given to 138 companies and tax holiday to five companies.

Will the taxation directorate-general no longer be aggressive in this political year in order to maintain the market situation?

The government has done a lot in the past two years to build a momentum for 2018. The results of the tax amnesty scheme aimed to create a new tax base can already be seen last year when tax revenues grew by 16 percent. Next, the government regulation No. 36/2017, which is a continuation of the tax amnesty law, will serve as a new instrument this year. There is also the finance minister’s regulation No. 165/2017, which offers to scrap fines to taxpayers who disclose their wealth. Then there is the implementation of AEoI (the Automatic Exchange of Information) this year. Hopefully, all these initiatives will become the capital for this year.

So it will not be as aggressive as last year?

We will continue the momentum of the tax amnesty. 

Read the full interview in this week's edition of Tempo English Magazine.

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