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Trusts widely used to evade tax: official
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A woman walks by a banner advertising the tax amnesty program in Central Jakarta on July 18. (JP/Dhoni Setiawan)
The government is working on a regulation to further control trusts, which have allegedly been widely used to evade tax.
A trust manages assets—money, investments or land—that involve settlers, or persons who put assets into a trust, trustees, or persons who manage the trust, and beneficiaries, or persons who benefit from the trust. Each of these entities is taxed differently.
According to John Hutagaol, an official at the Taxation Directorate General, trustees in many countries are not treated as tax subjects. Thus, the tax liability is on the settlors or the beneficiaries.
It is very possible that tax payers could exploit this mechanism for tax evasion, he argued.
"The Taxation Directorate General will issue a policy related to trusts that involve Indonesian tax payers," he said in Jakarta on Tuesday.
The new regulation, John further explained, had been drafted specifically to prevent taxpayers from evading their tax obligations through trusts.
"In order to succeed with the tax amnesty program, we invite Indonesian citizens who have funds in offshore trusts to immediately participate in tax amnesty," he said. (ags)
