As an urgent Perppu on banking transparency is imminent, an overarching question is how this move will help the tax authority catch tax cheats in Indonesia?
he government’s plan to issue a regulation in lieu of law (Perppu) concerning banking transparency, which includes allowing the tax authority to access taxpayers’ bank data, has sparked hot public debate.
The proponents argue that such an initiative is critical, outlining the fact that the government has to comply with the Automatic Exchange of Information (AEOI) program, a global move that contains new standards to tackle global tax avoidance.
In addition, the supporters also believe that the new regulation will greatly help the tax office pursue tax dodgers, especially when the tax amnesty ends later this month.
On the other hand, the opponents contend that scrapping banking secrecy and requiring banks to share their data with the tax authority could frighten investors and thus could have an adverse impact on Indonesia’s investment climate.
As an urgent Perppu on banking transparency is imminent, an overarching question is how this move will help the tax authority catch tax cheats in Indonesia? Furthermore, how will the tax office prepare so it can get the most out of banking transparency?
At the moment, there is no official draft as details are still being deliberated. As such, we cannot assess how the new regulation will effectively support the tax office in detecting tax dodgers. However, we are still able to learn from other countries that have implemented such initiatives.
This includes Australia, a country where I have been resident for tax purposes for the last three years.
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