SMEs lured to tax amnesty

THEJAKARTAPOST.COM | 3 Oktober 2016

Syahrizal, a Muslim-wear vendor at Tanah Abang Market, Central Jakarta, is considering applying for tax amnesty after learning about the government’s flagship program from conversations with fellow traders in Southeast Asia’s largest textile market.
The 54-year-old man, whose small kiosk reaped over Rp 800 million (US$61,600) in sales last year, however, said he lacked understanding on how to complete the necessary paperwork needed to support his application, as he only learned of the procedures from circulating messages in WhatsApp chat groups.
“If tax officers could explain the process directly, I would surely participate in the program,” Syahrizal told The Jakarta Post on Sunday.
Syahrizal is among business owners the government is targeting in its ongoing tax amnesty program. After attracting tycoons and individual taxpayers in the program’s first phase, running from July to September, the government has now set its sights on small and medium enterprises (SMEs), as the segment has massive potential, but its participation in the program remains small.
Data from the tax office’s website showed that, as of Sunday afternoon, SMEs owners had contributed Rp 2.64 trillion in redemption payments under the program, a small fraction compared to Rp 89.2 trillion in total redemption payments.
Finance Minister Sri Mulyani Indrawati said she expected to see more SMEs participate in the next two phases of the program, from October to December and January to March.
“We’ll keep informing them about the program. Perhaps they also need assistance in bookkeeping,” she said on Friday.
The nine-month amnesty program is expected to collect over Rp 165 trillion in penalty payments and to partly plug the widening state budget deficit amid the global economic slowdown.
There are more than 50 million SMEs in Indonesia, accounting for around 60 percent of the country’s economy and 99 percent of its workforce.
The 2016 Tax Amnesty Law, meanwhile, defines an SME as an individual or business entity with annual turnover of Rp 4.8 billion or lower. Under the tax amnesty program, SMEs are eligible for a lower penalty rate of 0.5 to 2 percent of declared or repatriated assets, compared with 2 to 10 percent for bigger taxpayers, to lure them into participating in the program and to help expand the nation’s low tax base.
On many occasions, President Joko “Jokowi” Widodo, a former furniture businessman, has also called on businesspeople to participate in the program.
Indonesian Employers Association (Apindo) chairman Hariyadi Sukamdani said the organization was committed to educating its member on the program.
“We will push our colleagues from the SME [segment] and society in general to take part in the program, because they still lack awareness of tax amnesty,” he said.
Separately, Center for Indonesia Taxation Analysis (CITA) executive director Yustinus Prastowo said the government should intensify the dissemination of program information to SME owners, as many of them think the program is exclusively targeting “big fish”.
Center for Reform in Economics (CORE) research director Mohammad Faisal, meanwhile, said many SME owners might not be paying close attention to recent news about the program on account of their relatively low education background.
“An aggressive campaign, including the door-to-door approach, is needed to lure this segment into the program,” he said. (fac/wnd)