Increasing Tax Compliance through Tax Amnesty Policy

 
Robert Sidauruk, Fathan Qorib
 
Tax experts and practitioners are urging the government to overcome the decrease in tax compliance by individual taxpayer by granting tax amnesty. At the same time, the government must also execute bureaucratic reform at the Directorate General of Tax to support the tax amnesty policy.
 
Tax expert, Darussalam, believes that overall compliance will be increased if the government grants tax amnesty. Moreover, a tax amnesty policy can also become a tool for the government to monitor non-complying taxpayers.
 
To effectively implement a tax amnesty, Mr. Darussalam added that it is important that it runs in parallel with sstrict punishment for non-compliance as well as a restructuring of the Directorate General of Tax.
 
In addition, it is important that tax amnesty only be granted in special circumstances, such as for taxpayers that satisfy specific criteria, or only granted once for every taxpayer, and other similar measures. If such approaches are applied, tax amnesty will not be misused or create unfairness for law-abiding-taxpayers.
 
“The government must provide justification as to why a tax amnesty should be granted to a non-complying taxpayer,” added Mr. Darussalam during a seminar in Jakarta on Wednesday.
 
Form a business’s perspective, Hariyadi B Sukamdani, Chairman of the Indonesian Employers Association, welcomed the idea of a tax amnesty policy. However, he suggested that amnesty should be only granted to individual taxpayers and not business entitis. Furthermore, Mr. Sukamdani also suggested that the policy must be incorporated under a law with clearly set out sanctions to avoid abuse by authorities.
 
“The sanctions must be imposed in a careful manner to avoid being used oppressly by the authorities,” said Mr. Sukamdani at the same event.
 
Sharing Mr. Sukamdani’s view, M. Soebakir, Chairman of Indonesia Tax Consultants Association, argued that the tax amnesty policy should be incorporated in the Amendment to Law on Taxation or under a different law.
 
Either way, Mr. Soebakir believes that now it is the best time for the government to come up with the policy as the current administration has gained strong trust from public which can be used to promote tax compliance.
 
“The tax amnesty policy will stop tax evasion, improve tax compliance by taxpayers, and eventually increase state income,” added Mr. Soebakir.
 
In-depth Study Required
Responding to the idea, John Hutagaol, Director of Tax Regulation at the Directorate General of Tax, asserted that any tax amnesty policy requires an in-depth study to show what objectives can be achieved by the policy. This applies to whether the tax amnesty is set to retrieve funds that are currently parked in safe havens abroad, or is merely aimed for greater tax compliance by individual tax payers.
 
“It requires an in-depth study, as to what context the tax amnesty will be organized. If the policy fails, there will be serious consequences,” added Mr. Hutagaol.
 
Despite his reservations, Mr. Hutagaol is supports the view that if the policy is realized, individual taxpayers should be prioritized. The high number of non-complying taxpayers has become a very basic problem for Indonesia’s tax system. If all stakeholders agree to a tax amnesty, individual taxpayers are the most appropriate parties to benefit from the policy.
 
“Individual taxpayers will be more appropriate beneficiaries of the policy rather than business entities,” concluded Mr. Hutagaol.
 
(hot/kc)