Indonesia To Continue Sending Tax Evaders To Jail

by Mary Swire, Tax-News.com, Hong Kong

20 November 2003

Indonesia’s Director General of Taxation has defended his department’s controversial policy of pursuing custodial sentences for tax evaders regardless of nationality and has pledged to continue the policy whilst regulations permit him to do so.

"The show must go on. We will continue to send uncooperative tax evaders to jail as we have the regulations on our side," said Hadi Purnomo during a hearing in the House of Representatives’ finance commission on Tuesday.

As well as local businessman Jasman Lim, British businessman Mark Michael Greenwood has also been detained without trial by the tax directorate for alleged non-payment of Rp45.8 billion ($5.4 million) of corporate tax. A further 68 accused of tax evasion are facing detention, 17 of whom are expatriates according to the directorate.

The aggressive policy has led to calls from some observers that equally strong deterrents should be in place to prevent corruption amongst tax officals. However, the Director General responded: “There is no regulation that permits the detention of tax officials without trial. If any abuses of the detention policy occur, the public should let the directorate know by providing evidence."

The Indonesian tax collection system has been notoriously lax in recent years and reports have indicated that tax revenues make up just 13% of the nation’s GDP compared to levels of between 25% and 40% in other ASEAN countries.

Latest estimates suggest that recalcitrant taxpayers owe the state some Rp20 trillion ($2.35 billion).

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