Current Students

Country profile | Indonesia – a tale of taxes

NWCCI students pay taxes too! Taxes and taxation vary from country to country and it is easy to forget that someone from another country might be surprised to find that the item they see in the store doesn’t actually cost what is listed on the price tag, there is still tax to be taken out at the register! In order to take a closer look at some of these differences and experiences with taxes in the U.S. we asked the current group of NWCCI participants from Indonesia to share their thoughts on paying taxes in Indonesia, as well as the United States.

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Perhaps you’ve heard of Jakarta or Sumatra. Or maybe you’ve heard of Indonesia’s great beaches, volcanoes, elephants, tigers and Komodo dragons, oh my! And while the NWCCI Indonesians boast excitedly about all of these wonderful parts of Indonesia’s culture, we asked them to elaborate on a different topic, specifically, taxes. They have come to the Pacific Northwest for a special reason – to study a range of subjects in the United States from media, tourism and hospitality management, early childhood education, business management and administration, to applied engineering. Their hope is to take their new knowledge back home to help improve their own economies. There are currently six participants in the NWCCI program from Indonesia.

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NWCCI participants from Indonesia with fellow Indonesian from another Department of State sponsored program, OneBeat. (left to right: Jotniel Putra, Nurdian Djuhasin, Jay Afrisando [from OneBeat], Theresia Rina, Judith Irmawati and Jaya Gulo)

FACT: Did you know that Indonesia is home to the world’s fourth most populous nation, has more than 300 local languages, has the fourth largest education system and is home to the world’s largest Muslim population, making it the largest Islamic country?

In fact, Indonesia’s 741,100 sq. mi. size makes it the fourth-largest Asian country, after China, India, and Saudi Arabia; the current population in of Indonesia is 259,342,291. Perhaps this contributes to Indonesia’s rank in the top 5 countries with the most active Twitter users in the world!

Indonesia has undergone an economic resurgence since the 1997 Asian financial crisis, becoming one of the world’s major emerging economies. Its population is diverse and not so evenly dispersed among five large islands, and many smaller islands. Along with its  growth came an ever increasing awareness in the necessity of taxes. “Indonesia is a country that relies heavily on tax revenue. 70 percent of the country budget comes from taxes,” Jotniel Putra, a current NWCCI participant who worked as a tax administration specialist back home in Indonesia, explained. Here in the U.S. he is volunteering his time helping American veterans with their taxes. Back home, he spent his time educating the public about paying taxes. He plans to bring his media training back to Indonesia to be able to better educate the population.

Tax: pajak
Taxation: per-pajak-an -> perpajakan
(courtesy of Jotniel)

We asked some of the other participants to tell us more about the tale of taxes in Indonesia, a tricky tale that one student admitted, “For the sake of progress and change for a better tax system it does not hurt to share a story about this.”

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(from left to right) Gulo Setiawan, Theresia Rina, Jotniel Putra, Judith Irmawati and Otis Kafiar visiting the Indonesian Embassy in Washington, D.C.

Theresia Rina, an NWCCI participant in charge of hotel relations before coming to the U.S. and now studying hotel and tourism management at Whatcom Community College, was surprised at the way Americans have to add additional tax to the price listed on a price tag in the U.S. She explained that groceries “in Indonesia includes 10% purchase tax. When we see the price is IDR 50.000, it means we will pay that specific amount of cash.” Otis Kafiar, a foreman at a power company in Indonesia before embarking on his journey to study applied engineering in the U.S. was also surprised at the way the tax was left out of the price on the product, “when shopping in Indonesia,” he said, “we will pay the prices that are put on label prices (the tax in the price).” Theresia compared this to the tourism (hotels) and gastronomy industry. She mentioned, “This may be the reason why Indonesia doesn’t have a “tip culture” like in the United States. Customers are paying the service tax in the bills already, which will go to employees’ monthly salary.” Learning how to tip is a topic covered in the NWCCI pre-academic period, along with many other basic American cultural norms.

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Gulo talks about Indonesian culture and lifestyle with the Edmonds college community.

Getting residents of a country to pay  taxes isn’t always an easy task, as one might imagine. The law in Indonesia requires residents to pay taxes “without exception, but the reality is different!” Judith Irmawati, who was a special needs school teacher in Indonesia before coming to the study in the U.S., explained. Otis also admitted, “Awareness of paying taxes from Indonesian citizens, companies, and other taxpayers is low, especially those who are living in the small cities.” Judith described how,“There is some corruption in the tax paying system, causing some businesses not to have to pay their part.” Similarly, Theresia expressed her concerns about where her money goes if she is paying taxes. She directed her concerns at one specific incident and admits, “I believe that [it is] not only myself who is afraid about tax corruption.” Among these issues in the current system, Jotniel explained that people are often trusted to calculate their taxes themselves and E-filing, while great in theory is still difficult due to lack of internet connection. He described how the ratio of tax officials to registered taxpayers is grossly unbalanced, causing further confusion, and that one tax official can have such a substantial amount of taxes that it can affect the quality of the work.

A theme arose as NWCCI participants expressed the urgency to educate fellow Indonesians about taxes. “Most of Indonesian people don’t know the importance of the taxes for our own country. Especially [those] required to pay the taxes from their salary,” Theresia explained. She suggested that the kind of tax training she received for her job should be available to all Indonesians. Jaya Gulo, who worked as a customs officer in Indonesia recommended “use[ing] a tax payment form to pay the taxes, fulfill it, and send it to the post offices, banks, or other tax payment point appointed and registered by Ministry of Finance. In filling the tax form, the taxpayers can ask for a tax payment guide or accomplish it by themselves.” He stressed that Indonesia is rich in natural and human resources and that it should tap into more of its own resources (i.e. taxes) because he believes, “A developed nation is an independent nation, which can finance themself without the help of others.”

The Indonesians’ concerns and suggestions were hopeful in light of Indonesia’s emerging tax system. Jotniel explained that, “Most of Indonesian people are very concerned and care [about] their taxes and assume that paying taxes is something cool.” He described how enthusiastically people line up at the tax office for monthly or annual tax reports, and how info sessions on taxes are always attended by many people. “Indonesians are very thirsty for information related to taxation,” he says. Nurdian Djuhasin who is studying Tourism and Hospitality Management at Whatcom Community College pointed out that Indonesians pay their taxes monthly, as opposed to the yearly tax system in the United Stations.

Curious how else tax paying might be similar or different from the United States? Gulo explained,

“Indonesians pay taxes for their income, corporate, goods and services, vehicles, land and buildings, which all of the taxes are administered by Directorate General of Tax. […] Due to economic reality, poor citizens are exempt from any taxation. By 2015, there are 15% registered tax payers, far from expected although the taxation rate in Indonesia is apparently categorized low.”

It also seems that Indonesians struggle with many of the same concerns.

“Some Indonesians are still reluctant to pay taxes because they consider that the government has not been able to address and accomplish the basic issues, for instance infrastructure, healthcare, education access, and assistance to poor people. They have not felt the taxes that they have paid for. Based on [a recently published survey] the awareness of Indonesians paying taxes increases caused by the better improvement of economy and government’s transparency.” ~ Jaya Gulo

As the American tax paying season has again begun, NWCCI students have noticed a few of the differences in the U.S. Even their local U.S. community colleges offer free tax workshops, and various places make use of qualified volunteers to assist in tax preparation. Jotniel mentioned that Indonesia doesn’t offer volunteer tax help services. He explained however, that there is a “tax corner” run by a tax officer.

With time, tax paying becomes second nature, Jotniel believes, “Slowly it will become a habit, and habits can become an awareness. Some people also still consider that paying taxes [is] a huge burden rather than an obligation, but this problem can be overcome by continuing to inform the citizens about the role of taxes to the development of the country.” The participants hope to improve upon many aspects of their country when they return home. They are  hopeful and look forward to the future progress of Indonesia, and are eager to bring their new skills back to their home country after the program’s completion this June, 2016.

By Kaysha Riggs

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US Dept of State The NWCCI program is part of the Community College Initiative, an exchange program sponsored by the U.S. Department of State’s Bureau of Educational and Cultural Affairs. The opinions expressed in this blog by writers and those providing comments are theirs alone, and do not reflect the opinions of the Northwest Community College Initiative program, Edmonds Community College, Whatcom Community College, Pierce College, the United States Department of State or any employee thereof. NWCCI and Edmonds Community College are not responsible for the accuracy of the information supplied by the student bloggers.

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