To qualify, taxpayers will have to agree to pay certain ransom (redemption) fees. The amount of any payable ransom is calculated using different formula depending on the declaration period; those who bring their assets back to the country will pay a lower fee than those who choose to keep it abroad. 

In exchange, the state will waive its right to collect outstanding payable taxes and the right to impose tax administrative and criminal sanctions.

However, the Tax Amnesty Law goes beyond that by stipulating that data and information collected from the taxpayers and administered by the Finance Ministry in relation to the implementation of the law may not be used as the basis for criminal investigation and/or prosecution of the taxpayers. 

Furthermore, the law states that the finance minister and his officials are prohibited from disclosing and/or sharing all the information submitted to them to other parties. 

The law also states that data and information related to the tax amnesty may not be requested by any law enforcement agencies or be shared with any party without the taxpayers’ approval. 

In other words, the law strictly prevents the tax authorities from sharing the information with, for example, the Money-Laundering Agency. Persons who disclose taxpayers’ information could get sentenced to five years in prison. 

So, and this is the tricky point, the law shows at a glance that the amnesty only applies to tax crime and does not cover a raft of crimes under other laws. 

However, many provisions under the Tax Amnesty Law state that as soon as the taxpayers declare their assets to the tax officers, the information in the documents will be fully protected by the tax secrecy regime and may not be used either for tests or for opening a criminal investigation.

This means that if a person legalizes his holdings and property in Indonesia, he will receive firm legal guarantees that he will not be summoned to any agencies, including law enforcement agencies, that they will not “put the squeeze” on him. He will not be asked about the sources of his capital and methods of its acquisition. He will not be prosecuted or face administrative liability. 

What is interesting is that the Tax Amnesty Law does not only protect the taxpayers who make the first move, declaring their assets to the tax authority. 

The individuals and companies under tax investigation before the issuance of the law may request an amnesty and if the amnesty is granted then such investigation will be stopped. 

The taxpayers do not have to deal further with the tax authorities under the audit procedures.

As the law gives full protection to the taxpayers under the amnesty program, we might want to ask how those tax officers who involve in this program can live with themselves. Is there any kind of indemnity that stops them from being prosecuted? Fortunately, there is also an article under the law that clearly stipulates that no officials from the finance ministry involved in the amnesty can be prosecuted if they are carrying out their duties based on good faith and in accordance with laws.

In conclusion, the Tax Amnesty Law offers a practical assurance of no prosecution. For someone who wants a bulletproof resolution with predictable numbers, it offers that. 

Making a clean breast of taxpayers’ affairs will give them a get-out-of-jail-free card. The government expects to get more participants if the guarantee of no prosecution were made more explicit. The question now is, will it work?

The classic problem with an amnesty is that the defaulters do not have much faith in the immunity clauses. They feel that if they disclosed their ill-gotten wealth, they would permanently be under the tax officials’ radar. The law clearly states that the data disclosed by the taxpayers will be used as a source for future tax payment. Such improved tracking and trailing by the tax authority after the declaration is worrying for them. 

Basically, amnesties provide a one-time injection of cash at the price of undermining taxpayer respect for the law and likely encouraging future non-compliance and ensuring the need of future tax amnesties.

The latest amnesty program is all about encouraging as many rich people as possible to come into the system, regularize their affairs and get back on the straight and narrow. The Tax Amnesty Law is an invitation to the people hiding assets overseas to bring their assets home with no questions asked.

***

The writer is a lawyer at a prominent law firm in South Jakarta, currently focusing on the tax amnesty.

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