JAKARTA, KOMPAS – The Indonesian tax system is still not friendly to people doing business in the country. Indonesia is ranked 114th out of 190 countries in the taxation indicator in the Ease of Doing Business (EODB) index for 2018.
In general, the World Bank ranked Indonesia 72nd out of 190 countries in the EODB index 2018 that was released two days ago. The assessment used 10 indicators, one of which was the ease of paying tax. For the tax indicator, Indonesia fell 10 places over the last year.
The chairman of the Association of Indonesian Entrepreneurs, Hariyadi B Sukamdani, said in Jakarta on Thursday that the tax system in Indonesia was not friendly enough to businesspeople. Therefore, the improvement and information of the tax system should be continued.
“The taxation procedure is still unsatisfactory. The reporting process, for example, can still go back and forth so it takes time. Perhaps the system is too complicated," he said.
According to the EODB 2018 report, businesspeople must report to the tax office 43 times a year. This figure is below the he average of countries in East Asia and the Pacific, which is 21.8 times.
The time needed to pay taxes is 207.5 hours a year or more than the average of 189.2 hours in East Asian and Pacific countries.
The EODB 2018 report also confirmed that the more efficient the tax system, the greater the tax revenue to the country. The tax contribution rate of business operators in Indonesia averages 30 percent of total profits, while in East Asia and Pacific countries it averages 33.6 percent.
The executive director of the Center for Indonesia Taxation Analysis, Yustinus Prastowo, said one of the factors that placed Indonesia in the low rank in the ease of paying taxes was the long process in paying value added tax (VAT). Businesspeople must report their VAT every month.
Prastowo said in order to improve the ease of paying tax, the tax office needed to integrate its tax IT system with the networks of other related agencies. He, however, said that establishing an integrated IT system required a large budget.
The budget of the tax authorities in the United States, for example, accounts for 2 percent of total tax revenues. If this figure is used as a reference, the development of the integrated tax IT system required about Rp 20 trillion, he added.
In addition to the fulfillment of the normative requirements of the ease of doing business, it is no less important to improve the tax services, including legal certainty for taxpayers, he said.
Separately, the chairman of the Board of Commissioners of the Deposit Insurance Corporation, Halim Alamsyah, said that improving the ranking of Indonesia in the ease of doing business index is important for long-term investors who want to invest in the country.
"The improvement of the ranking is significant. Hopefully the more stable economic and political conditions are, the more it will attract long-term investments. This will spur economic growth," he added.
However, Halim said, investors would also take into account the various infrastructure projects, most of which would begin operation in stages. The investors will see how the government uses its fiscal policies in coping with the state budget deficit in building infrastructure facilities.
Improvement
Meanwhile, Vice President Jusuf Kalla said the increase in Indonesia\'s ranking in the ease of doing business index was due to the improvement in the overall sectors in the economy. Last year, Indonesia was ranked 91st.
"We can no longer say our economy is not growing. Commodity prices have returned to their levels of three to four years ago. The oil price is also rising again," said Jusuf during a breakfast talk on the prospect of the Indonesian economy in 2018 that was held by the Association of the Indonesian Journalists in Jakarta on Thursday.
Bank Indonesia governor Agus DW Martowardojo said the condition of the Indonesian economy was getting better. However, the global, political and economic situation needed to be watched closely, especially in relation to the US government\'s internal policies and the policies of the US Federal Reserve.
In terms of banking performance, the chairman of the board of commissioners of the Financial Services Authority (OJK), Wimboh Santoso, said bank lending growth was slowing down as of September 2017. The decline occurred partly because the government had reimbursed the subsidies paid through state-owned companies.
The chairman of the Indonesian Chamber of Commerce and Industry (Kadin), Rosan P Roeslani, said the government’s efforts to increase tax revenue should be carried out in an elegant way because an aggressive approach to boost taxes could be a cause of concern for investors.
(LAS/NAD/FER/NDY)
