Tax Office Wants to See Your Credit Card Bills

Jakarta Globe, Tabita Diela, March 29, 2016

Finance Minister Bambang Brodjonegoro is looking for ways to boost tax revenue.
(Antara Photo/Irfan Anshori)

Jakarta. The tax office seeks to access millions of Indonesian credit card bills as part of its attempt to boost tax revenue and fund the 2016 state budget, Finance Minister Bambang Brodjonegoro told reporters on Tuesday (29/03).

The Directorate General of Taxation revealed its plans to access data on bank customer's savings accounts last year, prompting bankers to retort with protection measures as part of bank secrecy laws passed in 1998.

As a result, the government is in the process of revising regulations that will impose a mandatory requirement for banks to provide customers' credit card bills to the tax office, Bambang added.

At present, the tax office solely relies on taxpayers to file a self-assisted tax return using their tax registration number (NPWP). However, these often lack relevant details and other information the tax office needs to verify whether a would-be taxpayer has indeed paid all taxes.

"Without enough data, we are basically going to war without any weapon. Our weapon is data, but we still need [the requisite authority and] more access to banks and [Communication and Information Technology] Ministry data," Bambang said.

Mind the gap

According to the 2016 state budget, the tax office must collect at least Rp 1,360 trillion ($100 billion) in taxes this year, which is 28 percent higher than last year's tax revenue realization of Rp 1,061 trillion, as the government needs more money to fund more infrastructure projects.

Last year, the government only collected Rp 9 trillion in income tax from 900,000 individual taxpayers. Only 9.8 million of the total of 27,571,471 registered individual taxpayers filed tax returns, when there should be more than 120 million in the population of around 250 million.

Other measures

The tax office has also taken steps to cooperate with the Attorney General's Office (AGO), the State Intelligence Agency (BIN) and the National Police in order to gather information on high net worth individuals.

The tax office also seeks to tighten supervision of Indonesia's growing e-commerce sector, with particular attention to payment of value added tax for each transaction over the Internet.

It has also officially introduced, in January, an online payment system that is expected to boost transparency and eventually replace the current manual method of record keeping.

Not so secret

Meanwhile, Singapore has said it would automatically start sharing information with foreign tax authorities from 2018, in line with an agreement signed by more than 51 countries in 2014 that seeks to put an end to tax evasion. As a result, the days of undisclosed assets held offshore may become a thing of the past.

For local banks in Indonesia and elsewhere, the pressure on Singapore is opening up opportunities at home.

To yield greater payment of taxes in Indonesia, a Tax Amnesty bill is currently being deliberated by the House of Representatives with the hope that money parked in offshore accounts will be repatriated to Indonesia.

Indonesia is Singapore's main source of wealth assets, where some $225 billion is believed to be parked in Singapore alone.

"Indonesia accounts for 30-50 percent of business for private banks in Singapore," a Singapore-based banker at a top global wealth manager told Reuters last year.

Editing by Mika Vaswani