President Joko Widodo (Jokowi) has addressed the public’s concerns about the tax amnesty scheme. He said the public should not be concerned about the scheme and must not misunderstand the policy that the government is implementing from 18 July 2016 until the end of March 2017.
The President underlined that the policy is aimed primarily at big taxpayers. “Tax amnesty targets big taxpayers, especially those storing their funds overseas,” he said after opening the "Indonesia Fintech Festival & Conference" at the Indonesia Convention and Exhibition (ICE) BSD in Tangerang on Tuesday (30/8). However, others may also join this tax amnesty scheme, such as medium to small businesses.
Jokowi added that the policy is a facility provided by the state, which means people are free to choose whether or not they want to participate. The regulation that forms the legal basis for the tax amnesty policy says that tax amnesty is a right, and it should not be misconstrued as an obligation. (Read: Darmin: Tax Amnesty is for the Wealthy)
"It’s a right. The bigones (businesses and wealthy people) can choose to participate or not. Small businesses can choose to participate or not. That’s what the tax amnesty regulation is for; so it’s not an obligation. What’s all the fuss about?” he said.
The President was disappointed at the public’s unease over this policy because it forced the government to find a solution to respond to these concerns when the government should, in fact, be focusing on cracking the country’s major issues.
However, Jokowi addressed the concerns of the public by issuing a new Directorate General of Taxation Regulation on Monday (29/8). “A directorate general’s regulation has already been issued. It says farmers, fishermen or retirees can forget about it. They don’t need to participate in the tax amnesty program. They don’t need to exercise their right to participate in tax amnesty,” said the President
On Monday (29/8) afternoon, Director General of Tax Ken Dwijugeasteadi released the Directorate General of Tax Regulation No. 11/ 2016 concerning the tax amnesty policy. He said this regulation explains all technical aspects of the program in response to the public’s confusion. For instance, the redemption fee for pensioners or homes that were not reported in annual tax returns (SPT).
“For example, pensioners or people who have one source of income (can refer to this regulation),” Ken said. This new regulation underlines that certain individuals, such as farmers, fishermen, pensioners, migrant workers, or individuals inheriting wealth that has not been divided among beneficiaries, who have earnings below the level of the non-taxable income in 2015 are permitted not to participate in the tax amnesty program. Also, inherited or received (hibah) wealth is not an object of the tax amnesty program.
Taxpayers also have the chance to fix their tax returns if they want to report their wealth but do not wish to join the tax amnesty program. (Read: Public Starting to Get Concerned Over Tax Amnesty)
This new regulation was issued after the public demonstrated concern that the tax amnesty scheme targeted middle to lower income earners despite the government’s repeated reassurances that the aim of the scheme was to repatriate taxpayer assets that are stored overseas.