Millions Avoiding Taxes in Indonesia

September 24, 2013 Taxation in Asia-PacificTaxation in Indonesia

Indonesian rupiahJAKARTA – Tax dodging is a significant problem in Indonesia, seriously hindering the government’s ability to fund social and economic projects.

While delivering the opening address at a seminar of the Indonesian Tax Consultants Association in Jakarta on September 23rd, the Director General of Taxation of Indonesia Fuad Rahmany said that each year nearly 40 million individuals and businesses are skipping out on their tax obligations.

The total amount of taxes which remain unpaid every year could be as high as IRD 1 000 trillion, while, in comparison, the government expects to bring in IRD 1 148 trillion over the course of this year.

Explaining the significance of the tax avoidane, the Director General said that this is a “…national issue because tax is inseparable from statehood, but Indonesia is one of the countries where taxation has not yet been popularized well.”

Fuad Rahmany noted that the revenue shortfall directly affects the government’s ability build the social infrastructures needed to encourage greater levels of economic growth and expansion in Indonesia.

The Director General said that the problem could be lessened by the implementation of a new electronic ID system, allowing authorities to maintain more accurate records of the domicile of taxpayers, making it easier to collect all due taxes.

Photo by eltpics