An official checks individual taxpayer income tax returns (SPT) at the Primary Tax Office in Kemayoran, Jakarta, on the last day of reporting for 2016 individual tax returns in April (21/4). An increasing number of individual taxpayers who reported the documents through an online system reduced the long queues at the tax offices.
JAKARTA, KOMPAS – The government has issued a government regulation in lieu of law No. 1, 2017 to allow tax offices to directly access bank accounts of Indonesian citizens for tax purposes.
A regulation in lieu of law, called Perppu, is urgently needed. President Joko “Jokowi” Widodo said the authority to access to financial information should be used when it was really needed.
The President had several times unveiled the plan for the issuance during the tax amnesty campaigns carried out during the period between mid 2016 and early 2017.
"In 2018, all countries in the world should open up their financial account information. The Perppu is a continuation of that commitment," President Jokowi said after attending the National Book Day celebration at the Presidential Palace in Jakarta on Wednesday.
The President said Indonesia was committed to international agreements in the field of taxation, which among other things, oblige all countries to implement the automatic exchange of financial account information.
"The countries of the world are waiting for Indonesia\'s commitment to do this," the President added.
In principle, Perppu No. 1/2017 is issued for national and international interests.
The Perppu gives the authority to the Director General of Taxation and the Finance Ministry to obtain access to financial information for tax purposes.
Such information can be obtained from financial services institutions engaged in the banking sector, capital markets, insurance, and/or other entities categorized as financial institutions.
"The authority is given only for matters that are really needed. It should not be abused," the President added.
The issuance of the Perppu cannot be separated from the urgent need to immediately provide widespread access for tax authorities to receive and obtain financial information for tax purposes before June 30, 2017. Because of this urgency, on May 8, 2017, President Jokowi signed the Perppu. A copy of the Perppu, according to the President, has also been submitted to the House of Representatives.
Coordinating Economic Minister Darmin Nasution said the Perppu did not establish any obligations to taxpayers. The institutions that are required to submit financial statements to the Directorate General of Taxation are limited only to financial institutions.
"This is not just our own plan. The world is doing it. We also have to do it. If not, we will get into trouble and be considered negligent in supporting global standards," Darmin said.
Legal breakthrough
The issuance of the Perppu is based on a consideration of the need for a new mechanism to raise tax revenues as a major source of development funding. Perppu is a legal breakthrough to overcome the problem of the limited access the Directorate General of Taxation has to financial information. Perppu is also a breakthrough to meet short-term needs because revising the law takes a longer time.
The automatic exchange of financial account information will be implemented by September 2018. However, all countries, including Indonesia, must meet a number of conditions. For Indonesia, one of them is the issuance of a law-level regulation on access to financial information for tax purposes no later than June 30, 2017.
The executive director of the Center for Indonesia Taxation Analysis, Yustinus Prastowo, said what the government should do after getting a lot of financial data had to be considered.
According to Prastowo, the Directorate General of Taxation should immediately prepare compliance risk management, which, among other things, provides a system to classify the financial data of each taxpayer. The classification should consist of two major groups. The first is high-risk and distorted taxpayers. The second is low-risk taxpayers with a financial profile already in line with his tax payment data.
It is important that the Directorate General of Taxation can conduct examinations of taxpayers with a strong indication of being involved in tax evasion. This also provides a sense of security for taxpayers because the risk of tax disputes will be small.
Separately, the corporate secretary of PT Bank Mandiri (Persero) Tbk, Rohan Hafas, said Bank Mandiri was still waiting for directives from the government and the Financial Services Authority in regards to the reporting and retrieval of customer data.
