T

he Financial Services Authority (OJK) has proposed that the government demand reciprocal cooperation with the US regarding the latter'€™s request to apply its Foreign Account Tax Compliance Act (FATCA) in the country.

FATCA is a law that the US has unilaterally imposed on the rest of the world to prevent American taxpayers from evading taxes through offshore investment, expected to be implemented worldwide as of July 1.

The legislation requests all financial institutions outside the US to annually report data about financial accounts held by US citizens to the US Internal Revenue Service (IRS). The law also regulates that any financial institutions failing to comply with the legislation could be subject to 30 percent tax.

As of today, over 30 countries have signed agreements to comply with FATCA, including countries famous for bank secrecy, such as Switzerland and the Cayman Islands. Russia and China, however, have not expressed commitment to date.

OJK deputy commissioner Mulya Siregar said that the government should also request that the IRS facilitate access to Indonesians'€™ financial accounts in the US.

'€œWe want the agreement to be an intergovernmental agreement so that banks don'€™t report the data of their American customers directly to the IRS, but through [the Finance Ministry],'€ he said, adding that there were currently between 5,000 and 7,000 American citizens with financial accounts in Indonesia.

Mulya said recently that the US government had reported billions of dollars in potential losses due to tax evasion from its citizens abroad.

'€œWe want to help [the US] because tax evasion is also a big problem in our country,'€ he said.

In Indonesia alone, there have been 16,341 tax-evasion cases as of October last year, with only 5,630 cases resolved, while 10,771 remained open.

Meanwhile, 9,515 of 16,068 tax cases remained unresolved in 2012, data from the Finance Ministry'€™s tax court secretariat shows.

Danny Darussalam Tax Center (DDTC) researcher Bawono Kristiaji told The Jakarta Post on Friday that with tax evasion becoming more rampant around the world, ways to exchange information were being sought.

'€œSo, implementing FATCA is good as long as we also have access to Indonesian financial accounts in the US to prevent them from evading taxes too,'€ he said, adding that there was no rule prohibiting information exchange.

According to a recent survey by PricewaterhouseCoopers (PwC), 63 percent of banks in the country were prepared for the implementation of the FATCA.

However, as many as 22 percent of banks were still waiting for government instruction and further information regarding the FATCA, the survey shows.