Skip to main content

Tax dodging: Indonesia's luxury car 'owners' cry foul

JAKARTA (AFP) – No one was more surprised to learn that Dimas Prayitno owned a Rolls-Royce than the 21-year-old Indonesian himself, who was baffled when told he owed US$15,000 (S$20,800) in taxes on the luxury vehicle.

But a look at the construction worker’s home in a rundown neighbourhood quickly convinced officials that Prayitno was the latest victim of tax evasion by one of Jakarta’s wealthy elite.

Rampant tax dodging costs Indonesia billions of dollars in lost revenue annually and it has taken on a renewed urgency as Jakarta moves to pass a raft of bills aimed at revving up Southeast Asia’s biggest economy and adding millions of poor to the middle class.

“I was shocked and asked them ‘what car’?” Prayitno told AFP about his visit from tax officials.

“How could I afford a car when you see me living in a house like this?”

Prayitno – whose top pay is about 150,000 rupiah (S$14.70) a day – later learned he’d been duped by a former boss who took his government ID card ostensibly for a legitimate purpose.

But instead, the employer registered his luxury car in Prayitno’s name to dodge taxes.

About 350 Rolls-Royces, Ferraris and other top-end cars in Indonesia’s capital – punctuated by a yawning divide between rich and poor – are improperly listed in the name of low-income people like Prayitno, the tax agency said.

CARS, NOT BRICKS

But it’s just a fraction of the tax evasion problem.

In December, the CEO of state-owned airline Garuda Indonesia was sacked after allegedly smuggling a Harley-Davidson motorbike and expensive bicycles into the country on a commercial plane.

He was accused of using a subordinate’s name on import papers to avoid detection – and taxes.

Days later, Indonesia’s customs office said it had foiled a separate plot to smuggle dozens of luxury cars and motorbikes in mislabelled shipping containers to dodge more than US$3 million in levies.

“We’re going to crack down on this illegal activity,” finance minister Sri Mulyani said at the time.

“The contents of the shipping containers were listed as bricks but we found cars instead.”

Last year, the Global Financial Integrity Report (GFI) estimated Indonesia lost some US$6.5 billion in tax revenue in 2016 due to mislabelling on goods flowing in and out of the country.

The South-east Asian archipelago of more than 260 million is also one of the world’s worst for illegal movements of funds across international borders, according to GFI.

Indonesia has one of the lowest tax-to-GDP ratios regionally and the World Bank in January called for better tax collection efforts.

The call comes as parliament debates a raft of new legislation that would cut corporate taxes while making big internet firms pay more levies, part of a broader effort to cut red tape and loosen rigid labour laws to spur investment.

But raising domestic tax revenue is also key as President Joko Widodo kicks off a second term with plans for more costly infrastructure spending, including a planned move of the capital to Borneo island from congested Jakarta.

‘MANIPULATED’

In 2016, Jakarta offered an amnesty for tax evaders who would declare their hidden assets at home and abroad, which raked in levies totalling nearly US$10 billion. But that was just a fraction of assets thought to be stashed away.

Registering a car, a company or other property in the names of low-income people and subordinates is a common scheme used by wealthy Indonesians to avoid paying tax, experts said.

“Authorities should look at the beneficial owners not the people who are used to register that wealth,” said Fair Tax Forum researcher Nurkholis Hidayat.

“It’s been a problem for a long time but if the government manages to crack down on it that could help boost tax-collection efforts.”

Recently, Jakarta tax officers started slapping a “tax not paid” sticker on offside cars in rich parts of the city.

But it is cold comfort for victims like Prayitno.

The construction worker wants to become a ride-hailing driver for steadier work, but banks refused him a loan after the Rolls-Royce affair.

“I’ve been rejected three times because of the tax problem. But they’ve all seen my home and know that I was manipulated,” he said.

Source: Read Full Article

Comments

Popular posts from this blog

At Least 23 People Dead in Australia Bushfires As Blazes Continue Raging

SYDNEY (AP) — A father and son who were battling flames for two days are the latest victims of the worst wildfire season in Australian history, and the path of destruction widened in at least three states Saturday due to strong winds and high temperatures.The death toll in the wildfire crisis is now up to 23 people, Prime Minister Scott Morrison said after calling up about 3,000 reservists to battle the escalating fires, which are expected to be particularly fierce throughout the weekend.“We are facing another extremely difficult next 24 hours,” Morrison said at a televised news conference. “In recent times, particularly over the course of the balance of this week, we have seen this disaster escalate to an entirely new level.”Dick Lang, a 78-year-old acclaimed bush pilot and outback safari operator, and his 43-year-old son, Clayton, were identified by Australian authorities after their bodies were found Saturday on a highway on Kangaroo Island. Their family said their losses left them…

Fears coronavirus will spark divorce surge as couples self-isolate for months

Coronavirus is "very likely" to lead to an increase in marriage break-ups because of people being confined together for long periods in self-isolation, a leading divorce lawyer has said.Baroness Shackleton of Belgravia, whose previous clients have included Sir Paul McCartney, the Prince of Wales, Madonna and Liam Gallagher, revealed the view of the profession as a growing number of households go into voluntary lockdown in a bid to curb the spread of infection.Official health advice states that if one person in a property has a persistent cough or fever, everyone living there should stay at home for 14 days.Nicknamed the "Steel Magnolia" for her skills and charm, Lady Shackleton told peers at Westminster: "The prediction amongst divorce lawyers is that following self-imposed confinement it is very likely that the divorce rate will rise."Our peak times are after long exposure during the summer holidays and over Christmas."One only has to imagine what i…

Google accused of creating 'creepy' spy tool to squelch worker dissent

Google workers are accusing the company of developing an internal surveillance tool that they believe will be used to monitor their attempts to organise protests and discuss labour rights.Earlier this month, employees said they discovered that a team within the company was creating the new tool for the custom Google Chrome browser installed on all workers' computers and used to search internal systems. The concerns were outlined in a memo written by a Google employee and reviewed by Bloomberg News, and by three Google employees who requested anonymity because they aren't authorised to talk to the press.The tool would automatically report staffers who create a calendar event with more than 10 rooms or 100 participants, according to the employee memo. The most likely explanation, the memo alleged, "is that this is an attempt of leadership to immediately learn about any workers organisation attempts."Google is using the new software tool to police its own workers amid r…