Taxpayers in Indonesia waited until the last minute - as taxpayers everywhere often do. But enough of them responded to a new tax amnesty over the last few days to help make it a relative success as the first phase of the scheme came to a close yesterday.
As of 8pm in Jakarta, Indonesians declared a total of 3,516 trillion rupiah (S$368 billion) worth of assets, both at home and overseas.
This means the initiative has already achieved almost 90 per cent of its 4 quadrillion rupiah target in the first three months of the nine-month-long scheme, which officially kicked off only in mid-July.
The taxman also collected 97 trillion rupiah, or 59 per cent of the 165 trillion rupiah in tax revenue Jakarta had hoped to raise.
The only blemish was that just 135 trillion rupiah was repatriated from overseas. This was 14 per cent of the 937 trillion rupiah declared by taxpayers with assets abroad.
Under the scheme, individuals enjoy preferential tax rates ranging from 2 per cent to 10 per cent, depending on when they declare, and whether the funds are repatriated. But assets that have been repatriated will need to be invested locally for a minimum of three years.
The landmark tax-amnesty programme was touted by Jakarta as a silver bullet to help the country raise billions of dollars it needed to beef up a flagging state Budget.
Under the scheme, individuals enjoy preferential tax rates ranging from 2 per cent to 10 per cent, depending on when they declare, and whether the funds are repatriated.
But assets that have been repatriated will need to be invested locally for a minimum of three years.
The scheme had a slow start. That prompted a blame game directed at Singapore, where wealthy Indonesians had stashed US$200 billion (S$272 billion) worth of assets.
Some Indonesian officials accused Singapore of trying to undermine the tax amnesty over fears of an outflow of funds. But Singapore said it was a baseless allegation.
Indonesian taxpayers, from tycoons such as Mr Aburizal Bakrie and the Riady family to thousands of middle-income folk, have since stepped up. Tens of thousands rushed to more than 340 tax offices across the country in recent days to sign up for the scheme.
Director-general of taxes Ken Dwijugiasteadi told The Straits Times yesterday that some 341,110 taxpayers have signed up, including 15,000 new taxpayers. Analysts say most were probably eyeing the low tax rate offered in the first phase of the scheme which ended at midnight.
The rate for those who repatriate their assets goes up by 1 percentage point to 3 per cent from today, and to 5 per cent during the last phase which ends next March. For assets declared but not repatriated, a rate of 6 per cent will now apply and then 10 per cent in Phase 3.
"Thank God, we are seeing good numbers in the tax amnesty today," said Cabinet Secretary Pramono Anung yesterday. "Frankly, it has exceeded our expectation and this is only the first phase. Today, we were receiving so many participants that many of our servers hung."
Analysts sought to downplay the low repatriation rate of the offshore assets, adding that it is still early days and taxpayers will need time to divest those assets before being able to repatriate them.
Market conditions as well as penalties for early termination of investments overseas would also play a part in whether a taxpayer chooses to divest his offshore assets now.
Another reason, said OCBC Bank economist Wellian Wiranto, was that some of the offshore assets might have been repatriated by Indonesians before the amnesty programme started to avoid the three-year lock-in. "Moreover, we should not forget that, having been declared in black-and-white terms now, the still-offshore assets could eventually go back in formal ways depending on the risk-reward calculations of the owners," he said.