Participants in the first phase of the tax amnesty program now have until the end of the year to complete their paperwork
articipants in the first phase of the tax amnesty program now have until the end of the year to complete their paperwork.
The decision was made after the government met with big taxpayers, mostly businesspeople, at the State Palace on Thursday. The meeting was attended by President Joko “Jokowi” Widodo and Finance Minister Sri Mulyani Indrawati.
The businesspeople said they wanted to see the government extend the deadline for the amnesty’s first phase, which runs from July until September.
Participation in the first phase enables taxpayers to obtain lower redemption rates compared to the second and third phases of the program, and thus the first phase is considered the most lucrative of the three.
According to the 2016 Tax Amnesty Law, the redemption rate is set at 4 percent for those who declare their assets only and 2 percent for those looking to repatriate their assets from overseas between July and September.
After the meeting, the businesspeople, represented by Indonesian Chamber of Commerce and Industry (Kadin) chairman Rosan Roeslani, said Jokowi had signaled his agreement that the first period should be extended until December. The President hopes that the program will encourage a massive inflow of investment into the country to help develop and push economic growth.
However, Sri Mulyani said the government would only allow leniency in terms of the submission of paperwork and not on the deadline of the first phase itself.
“In accordance with the spirit of the Tax Amnesty Law, they can declare their assets and pay the redemption first and then submit all the required documents afterward,” she said, adding that the businesspeople had already expressed their wish to submit their documents simultaneously next week.
The extension of the deadline for document submissions was reiterated on Friday with the issuance of a statement from the Finance Ministry. The statement said redemption payments must be made before the completion of paperwork on Dec. 31.
The statement also said that a separate provision would be issued to facilitate late submissions.
Data from the Taxation Directorate General shows that declared assets have reached Rp 1.64 quadrillion (US$126.28 billion) as of Friday evening, 41 percent of the Rp 4 quadrillion target.
However, the amount of repatriated assets only reached Rp 90.1 trillion, or 9 percent, of the Rp 165 trillion target, while the amount of redemptions paid only stood at Rp 39.2 trillion, or 23.8 percent, of the Rp 165 trillion target.
Medco Group founder Arifin Panigoro attended the meeting and welcomed the extension, saying that leniency on the issue of paperwork would encourage big taxpayers to participate in the program and repatriate their assets stored overseas.
“It is better that the time period for document submission is extended until December. We’re still trying to submit them at the moment and it is nearly the end of September,” he said.
Meanwhile, Gadjah Mada University economist A. Tony Prasetiantono, who also attended Thursday’s meeting, said he had recommended to Jokowi that the first phase be extended for an additional month because there had been many cases of unprepared tax officers who were not able to fully explain the program to taxpayers.
“Taxpayers will also need to think about their decision for a long time before finally participating in the program. It takes time,” he said.
Center for Indonesia Taxation Analysis (CITA) executive director Yustinus Prastowo voiced a similar opinion and suggested that the President issue a regulation in lieu of law (Perppu) to support an extension period for the program’s first phase.
However, he acknowledged that extending the paperwork submission deadline would in itself attract more taxpayers. “On that note, the government should issue the provision soon before September ends.”
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