Rich Indonesians dodge taxes, hiding luxury assets under other people’s names
- Registering a car, a company or other property in the names of low-income people is a common scheme to avoid paying tax
- Government is moving to pass a raft of bills designed to kick-start Southeast Asia’s biggest economy and add millions of poor to the middle class
No one was more surprised to learn Dimas Prayitno owned a Rolls-Royce than the 21-year-old Indonesian himself, who was baffled when told he owed US$15,000 in taxes on the luxury vehicle.
But a look at the construction worker’s home in a rundown neighbourhood quickly convinced officials that Prayitno was the latest victim of tax evasion by one of Jakarta’s wealthy elite.
“I was shocked and asked them ‘what car’?” Prayitno said about his visit from tax officials. “How could I afford a car when you see me living in a house like this?”
Prayitno – whose top pay is about 150,000 rupiah (US$10) a day – later learned he’d been duped by a former boss who took his government ID card ostensibly for a legitimate purpose. But instead, the employer registered his luxury car in Prayitno’s name to dodge taxes.
About 350 Rolls-Royces, Ferraris and other top-end cars in Indonesia’s capital – punctuated by a yawning divide between rich and poor – are improperly listed in the name of low-income people like Prayitno, the tax agency said. But it’s just a fraction of the tax evasion problem.
In December, the CEO of state-owned airline Garuda Indonesia was sacked after allegedly smuggling a Harley-Davidson motorbike and expensive bicycles into the country on a commercial plane. He was accused of using a subordinate’s name on import papers to avoid detection – and taxes.
Days later, Indonesia’s customs office said it had foiled a separate plot to smuggle dozens of luxury cars and motorbikes in mislabelled shipping containers to dodge more than US$3 million in levies.