Bank Indonesia and the Financial Services Authority (OJK) are preparing instruments to facilitate inflows from the tax amnesty program, a bill on which the House of Representatives is currently deliberating, central bank governor Agus Martowodojo has said. 

"We need to prepare investment portfolio instruments to anticipate the inflows. We recommend infrastructure bonds and other productive activities" he said in Jakarta .on Friday

Once the tax amnesty bill is endorsed, the government expects billions of dollars to be repatriated by Indonesians who have parked cash overseas. The owners of the repatriated assets will be charged between 1 and 4 percent of the amount of the funds in exchange for being pardoned for past tax noncompliance.

The government estimates that Rp 165 trillion (US$12.42 billion) will enter the country thanks to the tax amnesty program.  BI predicts Rp 53.4 trillion in additional revenue will be yielded from the tax amnesty program.

Agus further said deliberation of the tax amnesty bill would also impact state revenues in 2016. He said the government would have to cut its spending by Rp 70 trillion to mitigate the shortfall if the House did not endorse the bill.

"Besides the tax amnesty bill deliberation, the government and the House are currently deliberating the revised draft on the 2016 state budget. Whether or not the tax amnesty bill is passed into a law, it will still affect state revenue," he said.

The government expects deliberation of tax the amnesty bill, which aims to increase state revenue, to be completed mid-June and take effect on July 1 . (ebf)