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Indonesia to review property firms' 'undeclared' tax
Publication Date : 13-08-2013
Indonesia's Taxation Directorate General office will probe property firms’ reports in the hope of recovering trillions of rupiah from improper and undervalued transactions.
According to taxation director general Fuad Rahmany, his office will soon deploy resources to property firms to check their past reports. He said most of the reports contained errors in the declared tax value.
“Many companies base their tax calculations on the taxable value of property [NJOP], when they should base it on the actual selling price during the transactions. The NJOP is often much lower than the selling price,” he said at the Finance Ministry on Monday.
The office will check the firms’ 2011 and 2012 reports, but may expand its probe to previous years if it discovers irregularities.
“If it turns out that they have been paying lower tax than they should, we will ask them to pay the difference,” he said, adding that the probe might result in trillions of rupiah of tax funds recovered by the office.
With the expected funds, the tax office hopes to be able to reach its 2013 tax revenue target, which was set at 995.21 trillion rupiah (US$96.74 billion) up from last year’s target of 885.03 rupiah trillion. In 2012, the office managed to collect 94.4 per cent of its target.
According to data from the tax office, its revenues reached 465.77 trillion rupiah during the period of January to July. The figure was 5.8 per cent higher than a year ago, but already made up 48.8 per cent of the total target.
Separately, University of Indonesia tax expert Gunadi said he believed the office would be able to hit the revenue target through other sources, not supported by the property probes as planned by Fuad.
“It will be difficult for the tax office to carry out thorough investigations into thousands of transactions. Even if it manages to collect some funds, the amount will not be significant enough to help boost the revenues,” he said during a telephone interview.
Gunadi argued that it would be more efficient for the office to partner with notary publics to set price samplings, which can help determine future tax calculations.
Meanwhile, Indonesian Real Estate (REI) chairman Setyo Maharso said the association welcomed the tax office’s plan, insisting that all processes had been done in a transparent manner by its 3,000 active members.
“We always work with notary publics and I do not think they are rash to quote improper prices. So the tax office can go ahead and check our reports. It is a totally valid move,” he said.
Major publicly-listed property firm PT Ciputra Development (CTRA) welcomes the plan as well. Ciputra director Tulus Santoso Brotosiswojo said the move would hopefully clear things up between property companies and the tax office.
“For us, it is difficult to meddle with [property] prices since we’re required to display everything as a public company,” he said.
According to Tulus, Ciputra is required to pay 5 per cent of its total sales as tax to the office. Last year, its sales amounted to 6 trillion rupiah. With at least 12 new projects in 2013, the company aims to secure 10.1 trillion rupiah in annual and marketing sales targets by year-end.
Justini Omas, corporate secretary of PT Agung Podomoro Land (APLN), another major listed property firm, said she was not worried about the probe, adding a similar check had been carried out in the past.