A Taxing Affair

All of us here are aware that Indonesia's tax directorate is in urgent need of reform. It is perceived as one of the most corrupt bureaucracies in a very corrupt country.

That the government is undertaking a reform of laws designed to increase its tax base and income is welcome.

The Corruption Eradication Commission (KPK) has suggested that the tax law amendments currently being drafted stipulate that wrongdoings by tax officials be considered criminal acts of corruption that should be open to legal prosecution, in order to provide a sense of equality in the tax system.

The country's antigraft watchdog also opposed giving greater authority to the tax office without adequate supervision, arguing that it could lead to corruption and abuse of power, thus undermining the government's efforts to improve public services through tax reforms.

What worries Jakartass, and several expats of his acquaintance, is that the tax office is 'getting tough' before these amendments have been approved.

In 2002, every expatriate employee was supposed to get an individual tax number. I know I did, but many didn't. However, thanks to a document* which came into my possession today, my monthly salary as a non-categorised member of staff is assumed to be US$4,802. (I wish !!) There's no way I, or my employer, can afford to pay tax on that.

As all salaries are paid net, i.e. the tax due for the staff as a whole, is paid by the employer, the result is that I, my colleagues, and expats throughour Indonesia are currently being told to go to Singapore every year in order to get new residence and work permits. It is cheaper to deal with the immigration authorities, to pay the exit tax (fiskal), transport costs and subsistence once a year than to renew the documentation here which has been the norm for my nigh on eighteen years residence.

The possession of these papers after five years continuous employment with the same employer entitled their holders to apply for semi-permanent status. this is now not possible.

If any of my readers can enlighten me on this matter, I'd be extremely grateful. And if there are any of you with the knowledge and expertise to navigate the company out of this morass, then please email me or leave a comment.

By-the-by, it is assumed that Americans earn US$9,988 per month and Koreans, the most numerous expats here, US$1,729.

Is the tax office racist as well as corrupt? .

*Keputusan Direktur Jenderal Pajak Nomor KEP-173/PJ/2002 TANGGAL 3 April 2002
 

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