The Jakarta Post
The government expects to book additional tax revenue amounting to hundreds of trillion rupiah from the tax amnesty bill currently being deliberated at the House of Representatives.
The additional revenue the law would lead to is estimated at over Rp 100 trillion (US$7.35 billion), depending on the tax penalty rate imposed on evaders that participate in the amnesty.
According to the current bill, the penalty rates are set between 1 percent and 4 percent for those declaring and bringing back their wealth into Indonesia.
The Finance Ministry has calculated that the amount of wealth that would be declared and repatriated under the law would reach Rp 1 quadrillion, thus generating revenue of Rp 10 trillion to Rp 40 trillion from penalties.
Meanwhile, those who opt to declare their wealth only will face penalty rates of 2 percent to 6 percent. The ministry estimates that the amount of wealth that would be declared only would be greater than the amount repatriated, at Rp 3.5 quadrillion to Rp 4 quadrillion.
As the penalty rates for non-repatriated wealth are higher in the bill, revenue from merely declared assets would be far higher according to the ministry, at between Rp 70 trillion and Rp 240 trillion.
He said that the government would include the targeted revenues in its upcoming revision of the 2016 state budget, signaling its confidence that the tax amnesty scheme could begin this year.
“We think that the maximum total revenue could reach Rp 180 trillion, but we will put Rp 165 trillion in the revised state budget. Again, it will all depend on the rates,” Finance Minister Bambang Brodjonegoro told lawmakers during a working meeting on Monday.
Bambang claimed that the calculations were based on intelligence data on special purpose vehicles (SPV) that it obtained from other authorities in two countries.
According to the data, there are 6,519 Indonesians listed as ultimate beneficiaries of the SPVs. Their assets are have accumulated since 1995.
“I recognize some names and some others are unknown to me, but the data is valid,” he said, trying to ensure the lawmakers.
He added that the amount of assets could be traced using data related to both tax evasion and tax avoidance practices.
Meanwhile, Bank Indonesia (BI) estimates that around Rp 53.4 trillion in additional revenue would result if the amnesty was implemented from June to December this year using the current range of penalties of between 2 and 4 percent.
The central bank based its calculation on Global Financial Integrity’s Illicit Financial Flows Report 2015 that highlighted the existence of an estimated Rp 3 quadrillion in illicit funds parked overseas by Indonesians.
BI projects that only 60 percent of the funds would be reported under the tax amnesty scheme.
“Additional tax revenue from the tax amnesty would increase the government’s ability to realize its infrastructure projects,” BI governor Agus Martowardojo said during the meeting.
Funds generated from the amnesty will be locked for a certain period of time within several instruments, such as mutual funds, limited participation mutual funds (RDPT), stocks, venture capital and stateowned enterprise bonds.
In the long term, the government expects that the funds would be directed towards real sector investments through the Investment Coordinating Board (BKPM).
Meanwhile, Bahana TCW Investment Management president director Edward Lubis wrote in a research note that tax amnesty would provide the country with a chance to tidy up the tax administration.
The tax amnesty bill, if passed into law, will provide reduced tax bills and pardons to tax evaders who report and repatriate their assets by the end of this year.
According to the latest data from the ministry’s treasury directorate general, the amount of tax collected as of April reached Rp 283 trillion, only around 20 percent of this year’s Rp 1.36 quadrillion target.
The amount is 8.4 percent lower than the Rp 309 trillion collected in the same period last year. This year’s tax revenue target, meanwhile, is 28 percent higher than last year’s total tax collection of Rp 1.06 quadrillion.
The government missed its tax collection target of Rp 1.29 quadrillion last year, forcing the then taxation director general Sigit Priadi Pramudito to resign in December, to be replaced by Ken Dwijugiasteadi.
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