Fifty three people—including foreign nationals—have been thrown into jail since the beginning of the year over unpaid taxes in Indonesia, as part of an effort to meet this year’s tax revenue target, according to a Bloomberg report.
Of all the imprisoned individuals, 45 of them have been released after paying 230 billion rupiah. The other eight people owe a total of 41 billion rupiah, the report said, adding that authorities seek to detain another 23 people who owe a collective 1.8 trillion rupiah.
The crackdown started eight months after the end of a nine-month amnesty program in March that gave Indonesians a chance to come clean on their tax affairs and aimed to improve compliance, the report said, adding the program unearthed US$360 billion dollars in previously undisclosed assets held in Indonesia and overseas.
The country’s finance minister Sri Mulyani Indrawati was quoted as saying that taxpayers were given fair warning and a very clear opportunity to comply. Indrawati has been given a tax revenue target of 1,473 trillion rupiah (US$108 billion) this year to enable the government to meet the goals of infrastructure spending and keeping the budget deficit under a legally mandated cap of 3% of GDP.
Hundreds more people have also been banned from traveling overseas while the tax office threatens to seize luxury assets of people such as Ferraris and Lamborghini cars as car owners fail to pay levies. As of Aug 1, about 3.9 million motorcycles and 700,000 cars hadn’t been properly registered, with a tax shortfall of 1.8 trillion rupiah, according to the Jakarta Levy Board.
Yon Arsal, head of compliance and revenue at the Tax Director-General’s office was quoted as reporting that the office had collected 60 percent, or 876 trillion rupiah, of the 2017 target as of Sep 30 while tax receipts are up about 12% compared to the same period last year excluding the amount from the amnesty program.
According to official numbers, only about 16 million registered taxpayers are required to submit returns this year in Indonesia that has a population of 260 million. However, only 11.3 million taxpayers have paid their dues.
Indonesia has one of the lowest tax ratios in the region—a forecasted tax revenue of 11% of GDP this year and 13-14% by 2021, compared with 17% in the Philippines, 15% in Malaysia and an average of about 34% in OECD for countries.