The government is in the midst of vigorously promoting its tax amnesty program, which came into effect this July. The government claims it would be more profitable for taxpayers to repatriate their assets to Indonesia than storing their funds in banks overseas.
Expert staff at the Finance Ministry’s Department of Tax Compliance Suryo Utomo said the government had prepared a number of investment instruments that taxpayers can use to manage their funds. These instruments include government securities (SBN), such as state bonds (SUN) and sukun (SBSN).
The government has also prepared investment instruments in the property sector, such as real estate, office and hotel investment funds (DIRE). There are also tens of state-owned enterprises that are ready to offer investments in strategic projects as a way to store the funds.
Suryo added that the repatriated funds could also be used for direct investments, asset-backed securities, insurance products, pension funds, venture funds and bonds issued by private entities.
If participants of the tax amnesty program do not wish to directly invest their funds, banks are also ready to store their funds in time deposits, current accounts or savings accounts.
“So investments would be as good as in overseas banks. State bonds offer a high yield,” said Suryo while promoting the tax amnesty program in Jakarta, Tuesday (26/7).
The Finance Ministry has calculated the government would be able to collect some IDR 1,000 trillion in repatriated funds from this tax amnesty.
He added that taxpayers need not be concerned about the implementation of this tax amnesty scheme. The procedure is fairly simple, and the government has guaranteed strict data confidentiality.
Therefore, Suryo expects taxpayers, especially those who own funds or assets overseas, to sign up for this tax amnesty program because starting 2018, the Automatic Exchange Information will come into effect, enabling easy access to taxpayer and banking data.
"If taxpayers do not sign up for this program, and are subsequently found to have failed to report their wealth, they will be subject to administrative sanction, as stipulated in the law on taxation. That fine is higher than the tax amnesty redemption fee," said Suryo.
Despite all these incentives, many entrepreneurs attending the tax amnesty promotional event objected to one of the provisions of the Tax Amnesty Law. They had an issue with the requirement to keep their funds in Indonesia for at least three years, arguing that during that period they may need cash flow to finance their businesses in an emergency.
In response to this objection, Suryo said the government had not issued derivative regulations on the technical aspects of this provision. These would be introduced gradually. The current promotion of the tax amnesty program also aims to gather input from potential participants about future problems that may arise.