Fair Tax Forum Press Release
Jakarta, April 6, 2016.

Tax Emergency Mafia Indonesia: The Government Must Rush Eradicate!

The Panama Papers reveal the dark practices of thousands of stealth companies and the behavior of thousands of super-rich people around the world in managing their finances. Panama is one of the tax haven countries so there is a strong suspicion that from the beginning they had a plan to avoid or avoid tax (tax avoidance). Panama is only one of the dozens of tax havens countries that provide facilities for corporations, super-rich people, and other criminals to avoid and avoid paying taxes.

Many businessmen and world political elites are listed in the Panama Papers. This confirms that the dirty practices of tax evasion and avoidance have become a serious threat to countries in mobilizing tax revenue for development financing.

“The Panama Papers show that the world is in an emergency era of tax crime. This should be a momentum for the Government of Indonesia to immediately eradicate the practice of tax avoidance, tax evasion, and money laundering by Indonesian taxpayers, both individuals and legal entities. The President needs to immediately form an Anti-Tax Crime Mafia Task Force that contains a combination of credible government and non-government institutions. The Task Force is working to investigate the list of names that enter the Panama Papers and other tax havens, “suggested Ah Maftuchan, Executive Director of the Prakarsa Association.

The Panama Papers also point out the poor financial system and global economy. “The economic system must be restructured immediately. Indonesia needs to spearhead changes in global financial governance related to the taxation system, the cessation of taxation and banking data confidentiality regimes, the exchange of information between countries, and the strengthening of taxation, legal and administrative institutions. President Jokowi can use the G-20 forum as a space to push for these agendas. In addition, Jokowi can propose the establishment of a World Taxation Agency under the United Nations, “said Khoirun Nikmah, Program Manager for the International NGO for Indonesia Development (INFID).

Global Financial Integrity / GFI (2015) reports that every year developing countries lose one trillion US dollars due to corruption, tax evasion, and money laundering. GFI predicts that the potential for tax evaporating from Indonesia due to the practice of escaping illicit money amounts to almost Rp. 200 trillion annually. “The high flow of illicit money from Indonesia is due to the low level of tax compliance (rich, super-rich, and corporate taxpayers), the high prevalence of tax corruption, embezzlement and tax evasion by complicated financial engineering methods, and low performance of the Indonesian tax authorities,” added Dadang Trisasongko, General Secretary, Transparency International Indonesia (TII).

The Publish What You Pay Indonesia Coalition said that Indonesia was in the 7th position of the countries with the highest illicit money flows. In the span of 2003-2012, Indonesia recorded flows of Rp. 1.699 trillion or an average of Rp 167 trillion per year. “Using the same calculation method, PWYP Indonesia noted the alleged total illicit money flow in Indonesia in 2014 amounting to Rp. 227.75 trillion or equivalent to 11.7% of the total APBN-P in 2014. Specifically, in the mining sector, the value of illicit money flows is estimated at Rp 23.89 trillion, of which Rp 21.33 trillion comes from illegal trade transactions and Rp 2.56 trillion comes from flows ‘hot’ money. Amid the low tax ratio in the mining sector, which only reaches 9.4%, it indicates that the practice of tax avoidance and evasion in the mining sector is still rife, “said Maryati Abdullah, PWYP Indonesia’s National Coordinator.
Responding to this emergency tax crime issue, “The Fair Tax Forum asks the government to also cancel the tax amnesty plan for super-rich taxpayers because it will be counter-productive to efforts to optimize tax revenue. This will also be a step backward in law enforcement taxation-money laundering. In addition, tax amnesty will reduce the level of compliance of taxpayers to pay taxes, tax amnesty will weaken the ‘authority’ of the government in the presence of super-rich people and corporations and tax amnesty will injure small-medium taxpayers (salarians with monthly salaries) which for this is tax compliance, “Ah Maftuchan concluded, as the Coordinator of the Fair Tax Forum.

Fair Tax Forum:
Association of PRAKARSA, ASPPUK, ICW (Indonesia Corruption Watch), IGJ (Indonesia for Global Justice), IHCS (Indonesian Human Rights Committee for Social Justice), ILR (Indonesian Legal Roundtable), PWYP Indonesia, YLKI (Indonesian Consumer Services Foundation), INFID (International NGO Forum on Indonesian Development), TII (Transparency International Indonesia)

Contact Person:
PRAKARSA Society: Ah. Maftuchan (amaftuchan@theprakarsa.org)
Transparency International Indonesia: Dadang Trisasongko (dtrisasongko@ti.or.id)
Publish What You Pay Indonesia: Maryati Abdullah (maryati.mrt@gmail.com)
INFID: Khoirun Nikmah (nikmah@infid.org)