Jakarta, Sept 16 (Antara) - In a bid to boost economic growth and increase the state's tax revenues, the government has issued several tax policies and incentives to facilitate companies to conduct their economic activities.
However, the lack of interest among businesses to utilize various tax incentives has prompted the government to evaluate them to identify the areas for improvement.
Several tax incentives have been formulated and issued since 2005 when Sri Mulyani Indrawati was the finance minister in the previous government.
Mulyani, who continues to retain the portfolio of the finance ministry in the current government, pointed out that the utilization of various tax incentives, such as tax holidays, tax allowances, and other tax-free facilities, was still limited.
Hence, the finance minister is ready to conduct an evaluation of the various tax incentives that have failed to draw players to boost economic activities.
"We will analyze where the constraints lie, whether they are with us or the businesses or whether there are other obstacles. We will identify what the obstacles are," the minister had remarked recently on Sept 6.
Apart from evaluating the reasons behind the lack of interest among businesses to take advantage of the tax incentives, the government will also assess the taxation administration, which until now, is viewed as being too complex and can have a negative effect on the tax revenue performance.
"We will continue to carry out consistent administration and policy improvement without causing problems to business processes," Minister Mulyani had stated in her address at a taxation seminar in Jakarta on Tuesday (Sept 12).
Efforts to improve taxation administration and the business processes will be streamlined at the regional and central government levels as well in tax offices without changing policy designs.
"If the tax regulation design is complex and its enforcement is complicated, it will frustrate both the tax officials and taxpayers, thereby resulting in a decline in the capacity to collect taxes," she remarked.
In the area of tax collection, the principle of equality and justice holds significance. Currently, several professional institutions continue to seek privileges in meeting their tax obligations, thereby making the taxation administration process more complicated.
According to Minister Mulyani, professional institutions have different characteristics, for instance, those engaged in the natural resources, pharmacy, construction, education, entertainment, communication, and state-owned enterprise sectors.
"There are several constituents that need various special treatments. If we respond to the institutions, with special economic activities, then we will need to conduct a more complex administration. This complexity leads to the enforcement of tax collection becoming low," she explained.
While evaluating tax incentives, the Finance Ministry will hold discussions with entrepreneurs to seek inputs to solve the problem.
Minister Mulyani believes that now is the right time to conduct an evaluation and bring about improvements. Most importantly, the number of companies utilizing the tax incentive policy could be counted on fingers.
"We can see if the incentives have been issued correctly, but constraints exist outside the tax. This is good for identification. Yet, if the incentives are no longer suitable (for the businesses), we should listen to them," she noted.
By conducting the evaluation process, the government is optimistic that the utilization of tax incentives by the business world in future would effectively boost the country's economic activities and performance.
Thus, tax incentives will be able to facilitate the implementation of the state budget, so it will be effective in supporting the progress of the industry at home and help increase the state's revenues from the tax sector.
In the meantime, the Taxation Directorate General (DJP) had recently revealed that cumulative tax revenues in the first eight months of this year had reached Rp686 trillion, or some 53.5 percent of the target of Rp1,283 trillion set in the 2017 state budget.
"Tax revenues were some 10.23 percent higher than those recorded in the same period last year," Director of Services and Public Relations of the DJP Hestu Yoga Saksama remarked.
Tax revenues until August this year included Rp378 trillion from non-oil/gas income tax, Rp267 trillion in value-added tax and luxury sales tax, Rp1.2 trillion in land and building tax (PBB), Rp4.3 trillion in other taxes, and Rp35 trillion in oil and gas income tax.
"The PBB in the first eight months last year had reached Rp15 trillion. There was a change in the regulation that the PBB will be received in September 2017. There is no problem," Saksama stated.
Tax revenue in August alone had totaled Rp85 trillion, or some three percent lower than Rp87 trillion recorded in the same month last year.
"It is necessary to bear in mind that last year, revenues under the tax amnesty program had reached almost Rp5 trillion in August, and PBB for August this year at around Rp10 trillion has not yet been received," according to Saksama.
The biggest challenge in tax collection during the remaining part of this year is additional revenues from tax amnesty.
"The DJP still has to work extra hard until the end of the year," he emphasized.
The government is optimistic that tax payers would be more compliant, and those not taking part in the tax amnesty program are urged to meet their tax obligations.
***3***(A014/INE/O001)EDITED BY INE(T.A014/A/BESSR/O. Tamindael) 16-09-2017 12:44:5 |
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