From today's Jakarta Post:

Tax office getting aggressive netting new taxpayers

Rendi A. Witular
The Jakarta Post/Jakarta

Dony, an employee of a private company in Central Jakarta, was annoyed when receiving a letter from a local tax office which required him to have a taxpayer registration number, locally known as NPWP, after he recently bought a 45-square-meter house in a real estate in Karawaci, west of Jakarta.

Without even bothering to get any details on the request -- he believed he would end up dealing with corrupt and bureaucratic tax officials -- Dony threw the letter into a trash bin.

If only Dony had known the consequence of not having NPWP, in which a taxpayer faces a minimum six months imprisonment and a maximum of six year, he would not have thrown the application form away.

"The Directorate General of Taxation is serious on extending the number of taxpayers to 10 millions by initiating several steps, including providing stiffer penalty to taxable people who do not have the NPWP," Director General of Taxation Hadi Purnomo said recently.

Hadi said aside from proposing a tougher sanction in the upcoming draft revision on tax laws for people refuse to have the NPWP, tax office had also applied several measures to directly requested taxable people, like Dony, for having it.

These efforts are just part of the directorate's move to aggressively netting new taxpayers after a mounting pressure from President Susilo Bambang Yudhoyono to immediately address the problem of low tax collection.

As of the end of last year, only 3.67 million of the country's 220 million population pay taxes with tax collections only contribute 13.5 percent of the gross domestic products in early this year -- one of the lowest among major Asian economies.

To increase the number of taxpayers, tax directorate general has been sending away millions of tax registration number application forms to those categorized as taxable over the past months.

The new taxable people are traced by the directorate based on their credit card information, passport registration, business activities, as well as information on the purchase of motorized vehicles, land and property.

But some forms fell to the "wrong hands" such as pensioners and domestic helpers.

The directorate claimed the measure would help boost the number of taxpayers into 10 million by October. On Oct. 19, President Susilo is slated to hand over the 10th million registration number to a taxable citizen.

However, not all of the taxable people who get the application forms automatically apply for NPWP since the existing tax laws still give ways for taxable people to choose not to have the number even with a consequence of paying higher taxes.

"I prefer not to have a tax registration number because I heard it is complicated and annoying. I would rather pay higher taxes than dealing with this complexity every year," said Denny, a state-owned bank employee who has an annual income of some Rp 48 million (US$4,660), far above the Rp 12 million annual minimum salary eligible for being taxed.

Even if the tax directorate fails to achieve its target of 10 million taxpayers by October -- due to reluctance from some people like Dony and Denny -- it may still grin in relief should the proposed draft tax laws are approved by the House of Representatives for execution early next year.

With the implementation of the new laws, taxable people could no longer choose for not having NPWP.

The proposed draft laws stipulate that aside from facing imprisonment, a taxable people who refuse to have NPWP will also have to pay two times of their evaded taxes in minimum and four times in maximum.

The tax directorate will also have an authority to inspect the amount of taxes for the past five years owned by the taxable people and it is authorized to state the figure based on its own calculation.

"Still, I won't ask for another letter from the tax office," Dony said. "Instead, I will fill in the form at the directorate's website ( I don't want to go to jail," he added, grinning.

Numbers of taxpayers
(Individual, corporate and institution)
2000 1.98 million
2001 2.48 million
2002 2.89 million
2003 3.29 million
2004 3.67 million
2005 10 million*
* Target estimation

Category for taxable people
1. Owner of land and property categorized as luxurious.
2. Owner of luxurious cars.
3. Owner of yachts or cruise ships.
4. Owner of an equity registered locally and overseas.
5. Foreign nationals.
6. Workers with a permanent status, earning more than Rp 12
million annually.

Source: Directorate General of Taxation