President Joko "Jokowi" Widodo has notified the House of Representatives about his intent to introduce another tax amnesty program, the second in five years, as part of the government attempt to boost tax revenues amid the Covid-19 pandemic. The Coordinating Minister for Economic Affairs Airlangga Hartarto said a stipulation about tax amnesty would be included in a bill for the 2009 Law about General Provisions and Tax Procedures revision. Tax amnesty is a free pass for taxpayers to disclose incomplete or unreported income in their previous tax periods without facing prosecution by the tax court or paying any penalty.
During this period, the taxpayers only need to pay a special tax for a government pardon on their tax liability. Similar tax amnesty programs and regulations were offered back in 1964 and 1984. According to a scholarly article published by the Finance Ministry, they did not have much success due to low participation. Meanwhile, Indonesia has collected Rp 228 trillion in taxes in the first three-month period this year, down 5.6 percent from the same period last year. That amounted to less than 19 percent of the government's tax revenue target of Rp 1,229.6 trillion for 2021. Last year, the government collected Rp 1,070 trillion in tax revenue, reaching just 89.3 percent of its Rp 1,198.8 trillion targets as the social restrictions to curb the spread of the Covid-19 pandemic dragged the economy. The government held the first tax amnesty program in 2016 and 2017, allowing tax evaders to come clean and declare their back taxes and hidden assets to the tax authorities, with only having to pay a much smaller amount than what they had to pay if the authorities caught them red-handed.
The scheme of Tax Amnesty
The government will hold a "tax amnesty volume II" or Voluntary Disclosure Program (PPS) for taxpayers (WP) from January 1, 2022, to June 30, 2022. As is known, this program aims to increase taxpayer compliance and is held based on the principles of simplicity, certainty, law and benefits. In this tax amnesty volume II, the government provides an oppo