Taxpayers line up to take part the third stage of the tax amnesty at the Directorate General of Taxation, Jakarta, Friday (31/3). The program, which was launched on July 1, 2016, ended on March 31, 2017.
JAKARTA, KOMPAS – After nine months, the tax amnesty has concluded. With all its weaknesses, charm and issues surrounding it, the tax amnesty recorded its achievements and at the same its failures. Whatever the outcome, it is a big step in tax reform.
Answering journalists’ questions before reviewing the implementation of the tax amnesty in the final two hours of the program, in Jakarta, Friday, Finance Minister Sri Mulyani Indrawati said the results of the tax amnesty were very encouraging.
Based on the amount of assets declared and penalty payments, especially if compared to the results of similar programs in other countries, Indonesia’s tax pardon was quite successful. However, in terms of the number of participants, it was not so great.
"Based on the efforts made by Directorate General of Taxation [DGT] during the nine-month period in implementing the tax amnesty, I am satisfied. They have worked extraordinarily hard," Sri Mulyani said.
After the tax amnesty, Sri Mulyani said the DGT would prepare tax reform and follow up on the data collected during the tax pardon program. Therefore, she said, her office had prepared a strategy to carry out the tasks.
The tax amnesty was carried out for nine months, from July 1, 2016 until March 31, 2017. As of Friday (31/3), the last day of the amnesty, the number of people taking part in the program reached 974,000.
The total amount of declared assets reached Rp 4.81 quadrillion, exceeding the initial target of Rp 4 quadrillion. Of the total amount, the repatriated funds totaled Rp 147 trillion, much lower than the target of Rp 1 quadrillion.
The total amount of declared assets at home and overseas, respectively, reached Rp 3.63 quadrillion and Rp 1.03 quadrillion. The government did not set a target for asset declaration. Meanwhile, penalty payments totaled Rp 112 trillion, slightly below the target of Rp 165 trillion.
The most successful
Darussalam of the Danny Darussalam Tax Center, said Indonesia’s tax amnesty was more successful than those in other countries.
The achievement is measured from the total value of declared assets and penalty payments. As for repatriation and participation rate, the results were below its potential.
The total value of declared assets in the tax amnesty was far higher than in similar programs conducted in other countries. Generally, the value of the repatriated funds ranged between Rp 26 trillion and Rp 263 trillion. The declared assets during Italy’s tax amnesty- which was considered among the highest in the world – totaled only Rp 1.18 quadrillion, only about a quarter of the amount booked by Indonesia.
Similarly, from the aspect penalty payments, the results were quite good. The countries that had held similar programs generally recorded penalty payments of between Rp 4.1 trillion and Rp 21.8 trillion. The previous highest value was recorded by Italy at Rp 59 trillion, or nearly half of Indonesia\'s results.
According to Darussalam, Indonesia’s tax amnesty was more successful than those in other countries due to four factors. First, the simplicity and balance between the benefits being offered and the potential punishment that will be given. Second, effective public awareness campaigns, quick response to arising problems with the issuance of regulations.
Third, good cooperation with a number of associations, including the Indonesian Employers Association, Association of Tax Consultants Indonesia and the Indonesian Institute of Accountants. Fourth, President Joko Widodo was directly involved in the tax amnesty campaigns.
"The momentum after the tax pardon must be maintained. We must reform tax provisions to allow the DGT to access banking data automatically in order to strengthen the database. The goals are to be able to better tap tax potential and carry out oversight on taxpayers in a long-term prospective, "Darussalam said.
After Tax Amnesty
Professor of tax policy at the School of Administrative Sciences, University of Indonesia, Haula Rosdiana, said the success or failure of the tax amnesty could be measured by the ability to meet the targets or comparisons to other countries. However, the most substantial success would be the measures taken after the tax amnesty.
"Measures to be taken after the tax pardon will determine the success or failure of the program. So, it is not about the amount of declared assets or repatriated funds. The measurement is whether the government can carry out comprehensive tax reform after the tax amnesty, " Haula added.
The reform in question is national reconciliation on both sides, namely the taxpayers and the government. On the part of the taxpayers, the level of compliance should be increased. From the government’s part, the effectiveness of the systems and services must also be improved.
"To that end, the biggest work ahead for the DGT is processing the data collected during the tax amnesty. The tax amnesty is a big step before conducting tax reform," Haula added.
