Panama Papers, with their revelation of 140 world politicians having offshore companies in 21 tax havens, have caused an uproar in Indonesia. The documents expose numbers of influent people from Indonesia. The Panama Papers are a set of 11.5 million secret document obtained from the leak of Mossack Fonseca communication server.

The International Consortium of Investigative Journalist (ICIJ) which has published offshore leaks in 2013 is the actor behind the expose of Panama Papers since 11 April. Tempo, an investigative media and one of members of ICIJ consortium, has released several Indonesian re known figures that have offshore companies as exposed in the Panama Papers.

“Because this is raw data, the journalists use three main approaches to investigate: look for public officials, people who have criminal case in the past, and people who have tax case in Panama Papers,” said Wahyu Dhyatmika known as Komang, Tempo investigation journalist, in PWYP Knowledge Forum, 15/4 in PWYP Indonesia office.

Komang presented the name revealed through Tempo reportage, start from Harry Azhar Azis (Head of Financial Investigation Bureau of Indonesia), two members of House of Representative, Agus Anwar (former owner of Pelita Bank), Djoko S Tcandra (Fugitive of Attorney General for Cessie Bali Bank Case), Riza Chalid (Oil and Gas Businessman), and M. Nazaruddin (former Democrat politician).

Bawono Kristiaji, Partner of Tax Research and Training Services at Danny Darussalam Tax Center, explained that high tax for high individual network in 1920-1950s triggers the emerging of tax haven. While the purpose of high tax is for revenue redistribution.

Panama Papers is the concrete example of highly growing secretive industry. The existence of secretive industry itself is due to the availability of supply and demand such as tax haven with low tariff tax, high secrecy security, easy to get permits for establishing company and no exchange information.

Panama Papers and Tax Amnesty
The attempts to avoid and evade the tax by high individual network in Panama Papers bring Tax Justice Forum, a Civil Society Coalition which PWYP Indonesia become its member, to urge the government to cancel tax amnesty plan for rich people. It will be contra productive to the tax revenue optimization. For further info, click here.

However, Aji has another point of view. The expose of Panama Papers is a simulation of Automatic Exchange of Information (AEoI) that will be implemented by G20 countries in 2018.

“It is just a set of data from one law firm, what if all data are being discloses? Tax amnesty is a bridge to prevent tsunami of tax dispute,” said Aji.

He added, tax amnesty is not supposed to be aiming for short target such as to increase tax revenue, but for longer target that is to get the tax payers database. Tax amnesty policy also must be followed with institutional improvement and data management.

“It’s difficult to accept High Individual Network such as Riza Chalid, who avoids and evades tax, will be forgiven. How about differentiate the treatment. It’s needed to settle the crime of tax first,” said Wiko Saputra, Researcher of Economic Policy at PWYP Indonesia.

Other than tax amnesty policy option, we can promote mandatory disclosure from actors/companies and tax promoter. Tax evasion can be easily seen by matching the tax annually notification letter, while tax avoidance can be identified by transfer pricing analysis. Country by country reporting also play key role to reduce tax avoidance. [Asr, RAWSR]