The Halfhearted Tax Investigation
The Corruption Eradication Commission (KPK) seems to lack seriousness in its investigation of the Angin Prayitno Aji tax case. Reform of taxation stands at the edge of an abyss.
AFTER two decades of hopes, reforms to Indonesian tax system have now been thrown in the trash. The handling of the alleged bribery case involving former Taxation Directorate General official Angin Prayitno Aji, which appears to have been carried out in halfheartedly, not only buries the sense of justice, but also means that the endeavor to improve the tax sector is nothing more than a slogan.
There are many suspicious aspects to the investigation into the Angin case. For example, the Corruption Eradication Commission (KPK) has yet to announce the names of suspects despite the fact that according to the investigation document, Angin and five other people have been suspects since February 4. Usually, suspects' names are published not long after the investigation document is issued. The anti-corruption commission's excuse that it will publish the names of the suspects after they have been detained feels contrived.
Another example is the leaking of the plan to search the offices of Jhonlin Baratama, a company owned by coal tycoon Andi Syamsuddin Arsyad alias Haji Isam. At the time of the search, investigators found no evidence at all. It is known that two truckloads of documents were removed from the Jhonlin offices shortly before investigators arrived. If no evidence has been found, it will be difficult for the KPK to determine how much tax Jhonlin should have paid. It is quite possible that the company as a taxpayer cannot now be investigated.
Jhonlin Baratama is one of three companies said to have paid bribes to Angin Prayitno Aji. Together with a subordinate, Angin is alleged to have received Rp30 billion to reduce Jhonlin's tax liabilities. The two are also alleged to have received Rp20 billion for manipulating the tax affairs of Gunung Madu Plantations and Bank PAN Indonesia. Four tax consultants in the three companies are also under investigation.
Moreover, the KPK has yet to indict Angin with money laundering despite investigators obtaining evidence in the form of assets worth billions of rupiah belonging to the former director of tax arrears and inspections. This property, in the form of land, hotels, restaurants and a resort, is located in Jakarta, Bogor, Yogyakarta and Magelang.
This is not the first time law enforcement into big cases is questioned. Previously, several investigation into a number of cases stopped at tax officials. There are companies guilty of embezzlement that remain untouched. This kind of law enforcement will not create a deterrent effect. As a result, taxation crimes continue. Dishonest taxpayers look for ways to evade tax, including asking for help from officials such as Angin. Or, conversely, it is people like Angin who offer "assistance".
There is a correlation between the decrepit state of law enforcement and the high levels of tax avoidance in this country. At present Indonesia's tax ratio is at around 10-11 percent, the lowest among Southeast Asian nations. This is despite the fact that Indonesia has the highest GDP in ASEAN. Since 2013, Indonesia's tax ratio has been trending downwards.
Because of weak law enforcement, dishonest taxpayers take advantage of opportunities for manipulation and negotiation to avoid paying tax. For example, they would rather pay a bribe of Rp10 billion than pay Rp100 billion in tax. Although bureaucratic reforms have led to increases in salaries and allowances for tax officials of up to Rp100 million per month, people like Angin continue to collude with dishonest taxpayers.
The key to taxation reforms is the provision of simultaneous incentives and disincentives. if incentives continue to be provided while the law is not enforced, tax thieves will continue their crimes. These practices are quite an anomaly at a time when the government is trying to increase tax revenues to provide a breathing space for the Indonesian economy which is currently gasping for breath.