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Why tax amnesty failed to repatriate assets
Although more than Rp 1 quadrillion worth of foreign assets was declared during the amnesty, only Rp 147 trillion in funds stashed abroad were repatriated.
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Tax campaign: People pass by a banner promoting the government's tax amnesty at Tanah Abang textile market in Jakarta. (Antara Photo/Wahyu Putro A)
T
he tax amnesty has officially ended. Some public and media commentators deemed the program a success, underscoring the Rp 4.8 quadrillion (US$355.5 billion) worth of previously unreported assets declared by almost 1 million taxpayers and raking in more than Rp 114 trillion in penalty fees in the process. Others, however, remained skeptical, highlighting the fact that the tax pardon initiative failed to achieve some of its targets.
Most notably: the lower than expected amount of repatriated funds. Indeed, based on tax office data, although more than Rp 1 quadrillion worth of foreign assets was declared during the amnesty, only Rp 147 trillion in funds stashed abroad were repatriated.
This begs the question of why the program was unable to bring the sizeable amount of money home. More importantly, what should the government do in the future to entice those assets back?
In my opinion, the main reason for the meager results of repatriated funds is because some foreign governments gave Indonesians a hard time when they wanted to send the money home.
Singapore, for example, a country where most of the foreign assets were declared, required its banks to file a suspicious transaction report with the Commercial Affairs Department, a police unit that deals with financial crimes, whenever a client availed of the tax amnesty and wished to repatriate their assets.
Some Singaporean bankers may have even suggested that when a client told them that he/ she was availing of the amnesty, that they suspected the client’s assets may not comply with regulations and that they would therefore report the client to the authorities.
As a result, despite the Indonesian government’s best efforts to convince taxpayers to continue repatriating their assets, most of them decided to take a safer route. That is, declare the assets to the Indonesian tax office during the amnesty but not repatriate them, thereby not exposing the taxpayers to further scrutiny by authorities abroad.
