Low Participation by Extractive Natural Resources Industry in Tax Amnesty

The Jakarta Globe – Jakarta. The Ministry of Finance has reported low participation by the extractive natural resources industry in the first phase of the tax amnesty program, which ended on Sept. 30.

The ministry’s Directorate General of Taxation said during a press gathering in Jakarta on Thursday (27/10) that of Indonesia’s 6,001 mining companies registered as corporate taxpayers, only 967 participated in the tax amnesty program.

In oil and gas industry, the participation rate was even lower, with only 68 of a total of 1,114 registered companies having joined the program so far.

Hestu Yoga Saksama, director for counseling, service and public relations at the Tax Directorate General, cited several reasons for the companies failing to join the program.

This includes the fact that companies may be struggling with their mining business permits, financial performance, or just simply being “disobedient.”

The government only raked in Rp 221 billion ($16.9 million) from penalties on repatriated and previously undeclared assets from companies in the coal and mining industry.

The figure was even smaller from those in the oil and gas industry, with only Rp 40 billion.

Hestu also unveiled broader taxation data, which shows that there is a declining number of corporate taxpayers in the sector.

“We encourage them to join the tax amnesty program to improve the figure for this and coming years,” he said.

The data also show that there is an increasing trend – from 2013 to 2015 – of companies in the extractive industry that have failed to comply with tax regulations.

In 2013, 3,035 of the 6,001 registered mining companies did not submit their annual tax reports, while the figure increased to 3,160 in 2014 and 3,624 in 2015.

The directorate plans to intensify its program to disseminate information to resource-rich areas, such as in Kalimantan and Sumatra.

Indonesia recorded Rp 3,656 trillion in previously undeclared assets, while taxpayers repatriated Rp 142.92 trillion in assets as of Sept. 30, when the first phase of the program ended.

The taxman collected Rp 93.26 trillion in additional revenue from those who paid penalties.

The government has set a target of Rp 1,000 trillion in repatriated assets, Rp 4,000 trillion in declared assets and Rp 165 trillion in additional tax revenue under the program.