TBI’s a Tax Cheat- Part 3. (Kelapa Gading and NPWPs)

This interview with a former teacher and then manager from TBI Kelapa Gading reveals that some of their franchise schools have been havens of tax avoidance and other murky practices.

In your experience did TBI Kelapa Gading comply with Indonesian tax law?

That’s a resounding no. They did not comply with tax laws in any way, shape or form.

Could you give me an example?

It’s as clear as daylight. Over a three and a half year period as a teacher and then a manager I never once received a tax slip. Neither did any of the other teachers. They didn’t even pretend to be complying with tax law. There were no tax slips monthly or annually. It was a complete non-starter. Giving tax slips is a legal requirement under Indonesian law. They flouted that law completely.

Did this worry you when you were a teacher?

Yes it did. My previous employer had always complied with the law in terms of tax so I was used to receiving the correct tax slips. I expected tax compliance when I started at TBI. It boasted about being “the benchmark TEFL school” in Indonesia. I expected someone making those boasts would pay tax. I was surprised they were so nonchalant.

Did you ever raise the issue with the school manager?

Yes I did. I raised it around the start of 2009 when Indonesia made the push for more employees to pay the right income tax by issuing NPWP tax cards.

Can you explain something about that?

Indonesia has long had an appalling record in terms of law enforcement. The tax area has been especially bad and there have been some high profile cases about a Tax Mafia who help avoid the coal and palm oil industries to avoid paying tax. A lot of the Indonesian economy has been “black market”, with tax revenues being pitifully small. Basically, the system has long been rigged in favor of the rich and powerful and tax avoidance has been a national sport. But in recent years some attempt has been made to collect more taxes and large Indonesian companies like Astra-Honda now comply fully with tax laws. I know this because of my dealings with them when we ran the In-House program.

Anyway, the NPWP card was an attempt to get more people paying their correct taxes. If you had this tax card, it entitled you to get out of Indonesia without paying the dreaded “fiscal tax”- a Rp 1.000.000 fine on anyone leaving the country by air or sea. But if you had an NPWP card, you had a tax file number and were legally required to file tax returns annually. This worried me. I had the NPWP but I had never seen a tax slip and was scared I was going to be asked to prove I had paid my taxes. I went to my then-manager about it.

And what did he say?

He told me not to worry too much about it. He said TBI was a little fish and the tax department would be going after the big fish first. He said he doubted TBI would be their first priority.

So in other words he was admitting that the correct taxes were being paid?

It was never in doubt. It was never questioned. We all knew there were no tax receipts.

Were you reassured by his “little fish, big fish” number?

Not really. But there was another part to it. He pointed out part of the contract where it said that TBI was responsible for paying all taxes on the salary. He said that if the tax department ever did come knocking we could point to that and demand that TBI honor their end of their deal and pay up.

So he was telling you to trust TBI to do the right thing in the case of a tax crackdown. Did you believe him?

I still thought TBI was a reputable company then. I didn’t know TBI Bogor has refused to help 2 deported British teachers who were on VKU visas in 2007. I didn’t know they had a history of betraying their teachers over money.

Should teachers in 2013 feel safe if they aren’t given accurate tax receipts according to you?

Not at all. If you have an NPWP it is your legal responsibility to file annual tax returns. This means you should be paying Rp 20 million – Rp 25 million income tax per year for an average TBI teacher. If TBI hasn’t paid taxes for you, it is you who are in the wrong. If the tax department ever decides to audit TEFL teachers, you will be the one who is judged to have broken the law. Would TBI then step in and do the right thing and pay your back taxes? It’s untested waters. I wouldn’t want to rely on these penny-pinching franchise owners to be too honorable however.

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