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Finance minister aims to improve tax compliance

Finance minister aims to improve tax compliance

JAKARTA: Awan Nurmawan Nuh, the Finance Ministry’s staff for tax regulation and law enforcement, said that only 600,000 taxpayers had joined the tax amnesty program out of the 20 million obliged to submit the tax return (SPT) this year, or less than 3 percent compliance rate.

“It shows that compliance rate is our main problem. Out of 20 million taxpayers obliged to submit the SPT, only 12.7 million had done so. Meaning that [compliance rate] is only 63 percent. It’s a problem,” Awan said at the University of Indonesia in Jakarta on Monday, January 9, 2017.

According to Awan, the government raised Rp1,105 trillion in tax revenue in 2016, or 81.5 percent of Rp1,335 trillion target set in the state budget (APBN).

Awan stressed that poor tax realization was due to low compliance rate. Moreover, he also pointed to the Directorate General of Tax’s (Tax DG) lack of capacity. “Therefore, in 2016, the government launched the tax amnesty program. The problem may lie with the Tax DG for its lack of capacity,” he said.

On the other hand, he revealed, the government has set a high tax revenue target for 2017. In 2017 state budget, revenue target is set at a Rp1,750.3 trillion. Tax revenue is expected to make up Rp1,464.8 trillion of the target, which includes customs and excise duty of Rp157.2 trillion. “Meaning that the Tax DG must generate Rp1,307.6 trillion.”

To achieve the target, according to Awan, the government will focus on improving tax compliance rate and enhancing Tax DG capacity in 2017. The government will carry out tax intensification and extensification through optimization of tax amnesty data. “Data optimization to boost compliance,” he said.

Meanwhile, the Finance Ministry will establish a tax reform team in order to enhance Tax DG capacity, Awan said. “Basically, the reform team will bolster the Tax DG capacity, in terms of human capital, organization, regulation, information technology and business process.”