The Covid-19 Tax Incentive is Poorly Targeted

Friday, 12 November 2021

The Covid-19 Tax Incentive is Poorly Targeted

JAKARTA. The provision of tax incentives in 2020 related to the handling of the Corona Virus Disease 2019 (Covid-19) pandemic turned out to be misdirected.

Citing Bisnis Indonesia on Friday edition (12/11), many taxpayers manipulate their transactions in order to get tax assistance from the government.

This was revealed in the results of the government evaluation as outlined in the 2020 Covid-9 Pandemic Tax Incentive Report document: Facilities and Their Impact on the Business World.

The report stated that the type of facility that missed the most was a 50% reduction in Income Tax Article (ITA) 25 installments.

However, the report did not reveal in detail the types of other facilities that were misdirected, as well as the amount of the missed tax incentive value.

Regarding this finding, the Directorate General of Taxes (DGT) claimed to have followed up by canceling the provision of facilities.

Consistent with BPK's Finding

The tax incentive leak information is in accordance with the findings of the Audit Board of Indonesia (BPK) in the Result Report (LHP) of the 2020 Central Government Financial Report (LKPP).

In its report, BPK stated that the error in distributing tax incentives in 2020 occurred in government-borne ITA 21 facility, government-borne final income tax borne and a 50% reduction in ITA 25 installments.

The inaccurate incentive value reached IDR 1.69 trillion due to the weakness of the verification mechanism.

In general, there are several types of mistakes made, such as taxpayers who are not actually eligible for the incentives.

In addition, there is the provision of double incentives to the same taxpayer, as well as the HS code of the recipient of the incentive that is not in accordance with the provisions.


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