Jakarta, PWYP Indonesia – The National Secretariat of Publish What You Pay (PWYP) Indonesia held a Sharing Session with the theme “Principles of Justice in Taxation and Its Cases in Indonesia” on Thursday (19/11/20) through online media Zoom. Ferdian Yazid (Transparency International Indonesia), as moderator, explained the urgency of tax justice for civil society. “This discussion is critical where extractive companies are still very vulnerable to tax evasion and illicit financial flows to this day. The hope is that through this discussion session, we as civil society organizations can have an understanding regarding the problem of tax evasion and other cases, especially in the extractive industry sector, “said Yazid in his opening.

Meliana Lumbantoruan (PWYP Indonesia Program Manager) as the speaker gave an introduction that tax justice is the principle of how to ensure that all individuals and companies pay the right amount of tax in order to meet the basic needs of citizens, carry out development programs, overcome poverty, inequality and achieve prosperity social. “Many parties are embezzling their money in Tax Haven countries so that we cannot access the data, and this is what is called Illicit Financial Flow (IFF) or illegal financial flows,” Meliana contrasts.

Illicit Financial Flow is the movement of funds obtained, transferred, or used illegally across jurisdictions from one country to another. This dirty practice is closely related to tax evasion of business activities, money laundering of criminal activities, bribery of public officials, and laundering of state assets. Meliana presented that this illicit financial flow is considered the cause of the economic slowdown in developing countries because it causes a potential loss of investment funds. It means that the state is disadvantaged by the flight of foreign funds that should drive the domestic economy. On the other hand, this issue has also received global attention and has become one of the critical issues in the 16th Sustainable Development Goals to provide fair access for all people and build effective, accountable, and inclusive institutions at all levels.

Meliana said there are two close links to illegal financial flows, including Tax Avoidance and Tax Evasion. “Tax Avoidance is a violation in taxation through a tax avoidance scheme to ease the tax burden, while Tax Evasion is an offense committed through a tax evasion scheme to reduce the amount of tax to be paid,” he explained.

Crucial things that require prioritized handling to be resolved are the terrible effects resulting from tax avoidance practices and illegal financial flows. Frauds that continue to be committed by large companies as if they are absent from tax obligations will continue to trigger new polemics to support sustainable economic growth, create jobs, reduce inequality, poverty, and climate change.

Meliana further conveyed efforts that could become the foundation for every civil society organization to encourage the government to increase financial transparency, law enforcement and anti-money laundering practices, detect and prevent cross-border tax evasion, periodic review of tax regulations, and encourage Multinational Corporate Transparency through compliance with EITI standards. “This is a call for civil society, where we oversee the issue of tax to monitor that people’s rights are not confiscated among those who are embezzling their wealth for personal gain,” Meliana concluded. (cra)