Tax laws hit working wives

Since the government’s flagship tax amnesty concluded last Friday, Indonesia now faces a mountain of challenges in reforming the country’s directorates general responsible for generating state revenue amid weak public compliance.

The government launched in December last year tax reform teams for the Taxation Directorate General as well as Customs and Excise Directorate General as part of its efforts to improve state revenue collection in the long run.

The move was important because the tax amnesty program only had a short life span of nine months.

The two teams — chaired by Finance Minister Sri Mulyani Indrawati — consist of directors, advisors, observers, journalists and other members with various mandates to reform the two government bodies that are responsible for Rp 1.75 quadrillion (US$131.34 billion) of state revenue in 2017.

The teams held on Monday their second plenary meeting at the Finance Ministry’s headquarters to report to the minister on their work progress and upcoming short-term plans after the tax amnesty, particularly to secure this year’s revenues by improving services and boosting law enforcement.

The government claimed that the reform teams had completed 11 improvements, or “quick wins,” at both directorates general during the first quarter of the year, including on employee integrity and synergy between the two institutions.

On IT systems, the officials have now implemented onlinebased mechanisms for almost all of their services and business processes.

Both directorates general have also merged their customs identity number (NIK) and tax identification number (NPWP) systems into a “single identity and business profile,” which enables exporters and importers to access customs services using only their NPWPs.

Sri Mulyani said all of the measures taken by the reform teams aimed at creating win-win solutions for the government, taxpayers, exporters and importers.

“We want to create a culture of compliance by improving the precision of our work without creating uncertainty for the business world. On the other hand, good business players have the right to be served well,” she said in a press conference.

The tax reform team, however, still has a great deal of homework to improve the tax database and the tax office’s internal procedures by managing business processes and dealing with recalcitrant taxpayers. One major task is to ensure that a regulation prohibiting tax officials from meeting taxpayers outside of the tax office is fully implemented. The government issued such a measure after recent bribery cases allegedly involving officials at both directorates general.

Meanwhile, Indonesian Employers Association’s (Apindo) advisory board member Sofjan Wanandi pointed out the need for government institutions to reduce policy inconsistencies and strengthen coordination with each other.

“We have discussed with the finance minister eliminating things that often confuse people and affect confidence [in the government],” he said, citing a recent policy flip-flop on the requirement for banks to submit credit card transaction data to the tax office.

The requirement was later annulled.

Bloomberg reported on Monday that Indonesia may be a step closer to winning a much-coveted investment grade from S&P Global Ratings after the tax amnesty ended.

“It’s imminent that Indonesia will gets back its investmentgrade rating,” said Gundy Cahyadi, an economist at DBS in Singapore.

“There has been significant improvement made on all fronts. The broadening of the tax base is going to be a plus in terms of how we look at the overall fiscal standing,” he added.

Richard Noonan, a spokesman for S&P, however, declined to comment on the tax amnesty.

The company in January said it might upgrade Indonesia to investment grade in 2017 or 2018 if the country delivered better spending, ensured that deficits were on a declining trend, and moderated government debt. (Anton Hermansyah, Grace D. Amianti and Farida Susanty)