Wednesday, November 2, 2016 12.04PM / By Sri Mulyani Indrawati
Indonesia's tax amnesty program, which was launched in July 2016 and will run until 31 March 2017, can be labeled a success. Up to 16 October 2016, a total of IDR 3,842.9 trillion (approx. USD $296 billion) worth of assets (either at home or abroad) have been declared to Indonesia's tax authorities nearly achieving the government's target of IDR 4,000 trillion.
However, asset repatriations (from the so-called tax havens) are not a success, being far from the government's initial projection and therefore Indonesian authorities are now easing regulations.
After the first phase of Indonesia's tax amnesty program ended on 30 September 2016, the momentum that was gained in September after several big Indonesian businessmen joined the program, is expected to wane. The key reason being that in the second phase higher tax tariffs are charged and thus makes it less attractive for taxpayers to declare and/or repatriate previously undeclared assets.
Regarding asset repatriations, however, momentum still needs to be generated in the remainder of the program in order to achieve the government's target. Authorities want to see IDR 1,000.0 (approx. USD $77 billion) worth of inflows (from abroad) - by 31 March 2017 - into the investment instruments that have been prepared by the government and financial authorities. However, up to Sunday evening (16/10/2016) only IDR 142.5 trillion worth of assets have been repatriated, or only slightly over 14 percent of the government's target.
To boost momentum, the government decided to ease regulations concerning fund repatriations:
Indonesian Finance Minister Sri Mulyani Indrawati said it is important to ease regulations regarding fund repatriations as she detected strong appetite from Indonesian taxpayers to declare assets their that are stashed offshore, but little appetite to move these assets into Indonesia. Indrawati added that of all declarations of offshore assets around 45 percent constitute investment and bonds (hence assets that are difficult to repatriate instantly).
For example, Singapore. It is a public secret that most undeclared funds owned by Indonesians are stashed in Singapore (perhaps some USD $200 billion worth of assets). Therefore it is no surprise that most foreign fund declarations under Indonesia's amnesty program concern assets stored in Singapore. Since the start of the program Indonesian taxpayers declared IDR 730.8 trillion (approx. USD $56 billion) worth of assets in Singapore. However, only IDR 87.9 trillion have been repatriated.
Largest Foreign Sources of Asset Declarations/Repatriations:
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