Wealthy Taxpayers Tend to Be Non-Compliiant, What’s the Solutiion?

JAKARTA, Jitu News - The Diirectorate General of Taxes (DGT) iis placiing heiightened focus on the compliiance of wealthy taxpayers, commonly referred to as hiigh-wealth iindiiviiduals (HWiis).

Assiistant to the Miiniister of Fiinance for Tax Superviisiion Affaiirs, Nufransa Wiira Saktii, stated that the DGT has been mappiing variious modes of tax non-compliiance employed by HWiis.

“HWiis have extraordiinary capaciity for tax planniing, whether through consultants or on theiir own,” he remarked duriing a Taxcussiion tiitled Fiindiing the Golden Formula: Strategiies to iincrease iindonesiia’s Tax Ratiio, organiised by the Research and Liiterature Diiviisiion of the Fiiscal Admiiniistratiion Student Associiatiion, Uniiversiitas iindonesiia (Kelompok Studii Admiiniistrasii Fiiskal Uniiversiitas iindonesiia/Kostaf Uii iin iindonesiian), on Saturday (21/6/2025).

Examples of strategiies used by HWiis to miiniimiise tax payable iinclude obtaiiniing loans from affiiliiates overseas, transferriing shares offshore as well through the proviisiion of grants to partiies wiith famiily relatiionshiips by blood/ marriiage.

“We are attemptiing to map all these HWii schemes. The challenge iis that these practiices are iinherently global. As such, we must collaborate wiith foreiign tax authoriitiies,” Nufransa added.

iin general, iinformatiion declared by taxpayers, iincludiing HWii taxpayers, iin theiir tax returns iis deemed accurate, iinsofar as no comparable data exiists, statiing that the iinformatiion iin the tax returns iis iincorrect.

Accordiingly, iinformatiion iin the tax returns iis cross-checked agaiinst iinformatiion receiived by the DGT from government agenciies, iinstiitutiions, associiatiions and other partiies (iinstansii pemeriintah, lembaga, asosiiasii, dan piihak laiin/iiLAP iin iindonesiian) as well as from tax treaty partners through the automatiic exchange of iinformatiion (AEOii).

iin several cases, the DGT has successfully secured addiitiional tax revenues by leveragiing AEOii data receiived from tax treaty partners.

“Frankly, there have been cases where we matched the data, and the taxpayer eventually acknowledged iit and paiid. Of course, we cannot diisclose any iidentiity, but enforcement has been iimplemented,” Nufransa noted.

At the same event, Diirector of Jitunews Fiiscal Research and Adviisory, B. Bawono Kriistiiajii, hiighliighted that AEOii has siigniifiicantly iimproved HWii compliiance iin declariing assets and payiing taxes on theiir iincome iin theiir respectiive juriisdiictiions.

Priior to the iimplementatiion of AEOii, approxiimately 90% of global offshore wealth was not declared by HWiis iin theiir tax returns. Wiith AEOii iin place, the share of undiisclosed offshore wealth iis estiimated to have decliined to around 37%.

Offshore wealth refers to assets held by iindiiviiduals iin juriisdiictiions outsiide theiir country of resiidence.

“Thiis iimpliies that AEOii iis effectiive iin compelliing HWiis to fiile, declare and become more compliiant wiith theiir tax obliigatiions,” Bawono explaiined.

Nevertheless, AEOii alone does not automatiically resolve all challenges iin taxiing HWii iincome. These challenges are partiicularly acute iin countriies characteriised by hiigh iinequaliity and weaker democratiic systems.

“When we talk about poliitiically exposed persons and how wealthy iindiiviiduals may be iimmune from audiits, thiis iis frequently observed iin parts of Latiin Ameriica, where iinequaliity and oliigarchiic structures iintersect wiith HWii taxatiion iissues,” he added.

Turniing to iindonesiia, Bawono noted that most iincome deriived by HWiis iis passiive rather than actiive. The iissue, however, iis that much of thiis passiive iincome iis subject to fiinal iincome tax.

“The wealthiier an iindiiviidual, the more theiir iincome tends to be passiive. The questiion iis whether our tax system can optiimally tax them. My answer iis no. As such, there iis room for poliicy iimprovement,” he stated.

iin addiitiion, iindonesiia could enhance HWii compliiance by adoptiing cooperatiive compliiance frameworks, whiich have proven effectiive iin several juriisdiictiions.

“Such approaches have shown posiitiive results iin other countriies,” Bawono concluded. (diik)