Sunset policy program extended until February

The government will extend its "sunset policy" tax program until February 2009 following requests by businesses which are unable to complete their accounts due to problems related to the global economic downturn.

"The sunset policy is delayed to February 2009," Finance Minister Sri Mulyani Indrawati said in Tuesday's gathering with investors at the Indonesia Stock Exchange.

"But I expect businesses will not wait until the deadline (to improve their tax filings or for people to have a tax registration number," she said.

The initial deadline for the policy was on Dec. 31.

As a result of a new tax law on general tax procedures late last year, the government has issued rules requiring all taxpayers to register and to honestly report their taxes and comply with the existing regulations.

Under the new policy, often referred to as the "sunset policy", the government has also given potential taxpayers time to get a tax registration number and start to comply with the regulations.

The government had originally given one year in which it waived administrative penalties for previous non-compliance in exchange for registration and subsequent accurate tax reporting before starting to impose stiffer sanctions on violators next year.

Mulyani said this month, particularly in the past few days, that tax offices nationwide had been inundated by thousands of people wanting to register for a tax number, or fix their tax reports.

"We are now busy handling people who wanted to comply with the policy," she said.

The extension of the policy will be laid down in the form of a regulation-in-lieu-of-law.

Mulyani said people had grown more aware of the need to register and become taxpayers, as seen from the growing number of people registering for a tax file number, especially recently.

People are flocking to the tax registration offices following the government's plan to slap a higher exit tax on travel overseas for those having no tax registration number, forcing most of the country's middle to upper-income people to comply with the requirements for tax registration.

According to the Directorate General of Taxation, between 50,000 and 100,000 people applied for a tax registration number this month, up from between 7,000 to 8,000 people on average in previous months.

"It is expected that no one who wants to comply with the sunset policy will be left unserved," Darmin said.

"On the other hand, the extension (of the policy) will strengthen the base for national taxation," he added.

The tax office anticipates a decline in tax revenue from the corporate sector, while tax from individuals is forecast to be more stable despite the impact of the global economic slowdown.

According to the directorate general of taxation, Indonesia only has about 6 million taxpayers, including individuals, companies, and institutions, out of a population of 230 million people.

Darmin also said that it was estimated that tax revenue for this year, including oil-and-gas tax revenue, would reach Rp 566.2 trillion, or 5.9 percent higher than the Rp 534.5 trillion targeted in the revised 2008 state budget.