Jakarta expects take-up for tax amnesty to surge next month

Indonesian officials have come out to defend the low take-up for the country's new tax amnesty scheme.
Indonesian officials have come out to defend the low take-up for the country's new tax amnesty scheme.PHOTO: AFP

Indonesian officials have come out to defend the low take-up for the country's new tax amnesty scheme, saying they expect a surge in numbers next month as the rich complete their tax evaluations.

"We have to admit that taxpayers like to do this at the last minute," Mr Luky Alfirman, the Finance Ministry's head of policy harmonisation and analysis, said at a media briefing yesterday.

"Recent discussions with tax officials from various areas in Indonesia also concluded that basically there are many taxpayers who are still doing their calculations."

His comments came after a slow start to the scheme, which kicked off last month to much fanfare.

Tax rates under the amnesty will range from 2 per cent to 10 per cent over three stages, depending on how soon individuals declare their previously untaxed assets and whether the funds are repatriated.

Indonesia is hoping that the nine- month amnesty programme will see the repatriation of about 1,000 trillion rupiah (S$103 billion) and add 165 trillion rupiah to its tax coffers.

Director-general of taxes Ken Dwijugiasteadi told reporters at the briefing that since June, taxpayers have pledged to repatriate about 5 trillion rupiah. Responding to critics who point to a lack of response from rich taxpayers, he said: "Big taxpayers have joined the programme (but) we are still in the first stage, with two more stages ahead of us."

Mr Luky remains optimistic that more taxpayers will step forward in the coming months.

He said 85 billion rupiah in total redemption fees was collected last month but it rose to 94 billion rupiah as of early this month, with 378 billion rupiah and 1.2 trillion rupiah pledged as of the third and fourth weeks of the month.

"So the trend is exponential and this was exactly what happened during the 'Sunset Policy' in 2008, when taxpayers also joined at the last minute," he said, referring to a similar tax plan from 2008 to 2009 which pulled in 7.5 trillion rupiah in revenue. "So we expect it to peak towards the end of September."

Indonesia has a 250 million- strong population, but only 27 million are registered taxpayers. Of this number, just a million file their tax returns regularly each year.

Coordinating Economic Minister Darmin Nasution on Monday reiterated that the tax amnesty scheme is aimed mainly at rich Indonesians who have undeclared assets overseas, reported The Jakarta Post.

Dr Siwage Dharma Negara, a visiting fellow at the Iseas - Yusof Ishak Institute, said that for tax receipts to play a meaningful part in contributing to state coffers, an overhaul of the tax administration system is needed in Indonesia.

"This will need a strong political will and resilience," he said.

A version of this article appeared in the print edition of The Straits Times on August 31, 2016, with the headline 'Jakarta expects take-up for tax amnesty to surge next month'. Print Edition | Subscribe