In a wishy-washy move, the government has raised the minimum value of financial accounts in banks and financial institutions that must be reported to and scrutinized by the tax office.

Just a week after it required banks and other institutions, such as insurance companies and cooperatives, to report individual accounts with minimum total balances of Rp 200 million (US$15,052), the Finance Ministry on Wednesday pushed up the lower limit to Rp 1 billion.

In its defense of the move, the ministry argued that it was paying attention to a lot of protests from the public, particularly small and medium enterprises (SMEs) that deemed the threshold “too low” and feared the tax office would seek “extra taxes” through wider access to the accounts.

Earlier, experts also said that setting the benchmark at Rp 200 million sparked concerns that the government was targeting the middle class rather than the “big fish.”

“We have increased the threshold to Rp 1 billion based on the fairness principle,” Finance Minister Sri Mulyani Indrawati said in a press conference on Friday.

She added that although the number of account holders with balances of more than Rp 1 billion was smaller than those with balances of less than Rp 1 billion, the value of funds held by the former in the Indonesian banking industry was much higher than the latter’s.

Accounts with balances exceeding Rp 1 billion represent 64.22 percent of overall savings held by local banks, according to data from the Deposit Insurance Corporation (LPS).

With the latest change, the mandatory reporting for domestic tax monitoring and investigation will only affect 496,867 accounts, 0.25 percent of all existing accounts.

That is much fewer than the 2.31 million accounts, 1.14 percent of all existing accounts, covered by the previous arrangement.

The mandatory reporting follows the issuance of Regulation-in-Lieu-of-Law (Perppu) No. 1/2017, a primary measure needed to implement its compliance with the international agreement on the Automatic Exchange of Information (AEOI).

Sri Mulyani said that the higher threshold would also put a lighter burden on banks and other financial institutions as they would need to submit a smaller number of accounts to the tax office each year and therefore it would reduce reporting costs.

In an attempt to calm a panicky public, the finance minister guaranteed that the greater access to financial data would not be abused as a source of information for the tax office to calculate extra taxes to charge citizens.

“Savings in the bank accounts are usually free from tax because they derive from salaries and investments, from which companies and fund managers already deduct taxes,” she said.

Director general of taxation Ken Dwijugiasteadi said there would be no problem increasing the threshold because the tax office could still use a by-request mechanism to examine any bank accounts displaying suspicious transactions.

“We can still do by-request examinations and we already work with the Financial Transaction Reports and Analysis Centre [PPATK], so we will know if there are any suspicious transactions,” he said.

However, concerns still linger over the security of the data following the elimination of banking secrecy.

Institute for Development of Economics and Finance (INDEF) economist Aviliani said that the public still feared the tax office would not treat the data of the accounts safely, prompting leaks.

“People are still afraid of being blackmailed by tax officers as their trust in them is still low. The tax office should make it clear which officers from what level can access the data,” she said.

One of the Finance Ministry’s special staff members for tax compliance, Suryo Utomo, made assurances that access to the data would remain limited, requiring permits from high-profile officers.

“The details about the officer’s authority will be stipulated in the standard operating procedures that we are currently drafting,” he said.

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