Why tax amnesty failed to repatriate assets

Gatot Soepriyanto
Senior faculty member of the accounting and finance department at BINUS University, Jakarta

PREMIUM

Melbourne / Mon, April 10, 2017 / 10:02 am

Why tax amnesty failed to repatriate assets

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)

The 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 opin...