Decreasing Corruption, Increasing Tax Revenue.
Corruption in Indonesia
The Law of the Republic of Indonesia no. 31, year 1999, regarding Eradication of Criminal Acts of Corruption, considers a criminal acts of corruption to:
Anyone with the intention of enriching himself or other persons or a corporation, abusing the authority, the facilities or other means at their disposal due to rank or position in such a way that is detrimental to the finances of the state or the economy of the state.
While the Corruption Eradication Commission (KPK) has been aggressively recording numerous caught red-handed (OTT: Operasi Tangkap Tangan) arrests, and having had quite a few successful alleged corruption cases taken into court, none of the efforts seems effective to reduce the corruptions hypes in Indonesia. “Greed” one of the human’s traits still prevails in every corner of the society.
Kompas 3 January 2018, highlighted Indonesia being placed in 3rd bottom ranks of 16 countries in Asia, the US, and Australia surveyed by the Political & Economic-Risk Consultancy in 2018, yet Indonesia was still considered ONLY “better” compared to Vietnam and Cambodia.
Perceptions of Corruption in Asia, the US and Australia in 2018.
Having such a permissive mindset as part of our society’s way of thinking has put big smiles on the faces of alleged corruptors. They seem freed from any social stigmas, and are able to maintain their normal appearance in formal occasions, posing in front of media pictures portraying their shameful pride.
After receiving many recommendations from the public, starting 1st week of 2019, KPK begins handcuffing detainees when they were being questioned at the KPK office or when they are away from their cells for attending physician at a hospital. The handcuffing of KPK detainees is stipulated in article 12 (2) of KPK Regulation no. 01/2012 on the treatment of KPK detainees.
Mega Corruptions in Indonesia.
The Indonesian Court for Corruption Crimes (also known for TIPIKOR), has recorded a large scale of corruption cases, which would relate to executive members of political parties, the following 2(two) cases described as follow:
1. E-KTP (Electronic Identification Card). On Monday, July 17, 2017, the court named Setya Novanto (Setnov), former House of Representatives Speaker a defendant in the E-KTP graft case. The court revealed 49% which equals to Rp. 2.5 Trillion from the state budget was disbursed 7% amongst the Ministry of Home Affairs, and 5% amongst members of parliament Commission II. Setnov and Andi Narogong got 11% of the total project budget Rp. 5.9 Trillion which equaling to Rp. 574,200,000,000.
On April 24, 2017 Setnov was proven guilty for his role in the e-KTP graft case and sentenced for 15 years in prison. The court also orders him to pay Rp. 500 million in fines and restitution amounting to the $7.3 million or Rp. 101.7 billion (1US$ was then rated at Rp. 13,933).
2. The Hambalang Project. On April 27, 2016, at the central Jakarta district court, Muhammad Nazaruddin former treasurer of the Democratic Party admitted that Permai Group the company that he claimed belongs to Anas Urbaningrum former Chairman of the Democratic Party -- had targeted 40% profit in state-fund projects. Nazaruddin was the defendant in the Hambalang project graft case, who had allegedly received Rp. 37 billion from PT. Duta Graha Indah and PT. Nindya Karya in commitment fees in exchange for his funding approval for several state projects, laundered Rp. 627.86 billion during the period of 2010 - 2014, and Rp. 83.6 billion in between 2009 to 2010.
The indictment also revealed Permai Group’s financial sources were contributed from companies within the group, who were working on many state funded projects in 2009. Nazaruddin’s role was significant in advancing his proposed budget to the House Representatives and rigging projects’ tendering process to be won by those affiliated companies of Permai Group to be named as project partners providing materials and services. The accumulating total profit received was fixed at 40% from the total project value that approximately valued at Rp. 1.884 trillion.
Additionally, Nazaruddin was allegedly received money from other parties, i.e. PT. Adhi Karya, PT. Duta Graha Indah, and PT. Pembangunan Perumahan (PT. PP), money received as fees paid for his effort in advancing state projects in 2009. The sum of money was suspected to be at +/- Rp. 76.536 billion.
Company involvement in criminal acts of corruption.
Those cases presented at the Tipikor court had revealed to us that there are companies that were purposefully established to further devise criminal acts of corruption. Another commendable milestone by the KPK was depicted, when it announced a State-Owned Enterprise PT. Nindya Karya and a private company, PT. Tuah Sejati, were related to an alleged corruption case on Friday (4/13/2018). Both companies were processed in a case of alleged corruption in the implementation of development of Unloading Dock in Sabang, Aceh, financed by State Budget of budget year 2006-2011.
Revealing both PT Nindya Karya and PT. Tuah Sejati as related subjects to the alleged graft case is a hopeful evidence that would kick off a deterrent effect for other BUMN and private companies in their involvement in criminal acts of corruption. The most recent case of company involvement in criminal acts of corruption took place on January 3, 2019, as the Jakarta Corruption Court founded PT. DUTA Graha Indah now PT. Nusa Konstruksi Enjiniring (NKE) guilty – and order it to pay Rp.85.4 billion restitution money and banned the company from undertaking any government projects over the next six months.
A criminal provision in fiscal point of view.
One of the forms of criminal provision in fiscal was stipulated on Article 39 Law no. 16/2009, concerning the regulation of the Government Law replacing Law no. 5/ 2008, concerning the fourth amendment of Law no. 6/1983 regarding General Regulation and Tax Procedures, identifies those whomsoever deliberately:
• Files an incorrect tax return, thus may cause losses to the revenue of the state.
• Fails to file a tax return, thus may cause losses to the revenue of the state.
Article 39(1), UU KUP, further arrange penalties by imprisonment for a minimum 6 months and a maximum 6 years; and fine at minimum 2 times and maximum 4 times of the amount of unpaid or underpaid tax.
Several indictments in corruption cases, must have implied such “undeclared’ tax returns, as it goes without saying “a thief shalt not confess”. It is safe to say that any act of a criminal corruption should also be considered as a criminal provision against a fiscal law.
An illustration of potential tax revenue (income tax) loses done by sentenced corruptors
Not only individual tax payer (Wajib Pajak Orang Pribadi), but also corporate tax payer (Wajib Pajak Badan) who were indicted in the corruption court (TIPIKOR), should all undergo a tax investigation and audit, so as to implementing the Article 39 of UU KUP. Hopefully in 2019, DJP (Directorate General of Taxation) would summon enough courage to impose the fiscal law on every TIPIKOR cases/subjects, such an effort that might help to increase potential tax revenue.
Obviously acknowledging deduction in imprisonment period, does not help to induce a deterrent effect for those corruptors and “prospective” corruptors. The idea of implementing severe actions against any breach of the fiscal law could be an effort to impoverish those corruptors. This might force anyone to think a million times over, before deciding on turning greed into a criminal act.
Reducing corruption, while increasing tax revenue for a greater good of the nation. Why not?
Bambang B Suwarso, 3 January 2019
