JAKARTA • Indonesia has moved a step closer to hunting down tens of billions of dollars it believes its citizens have hidden abroad after passing a law that will give tax officials access to financial data held by other countries.
Parliament yesterday approved a law in lieu of a presidential decree, fulfilling a requirement to participate under the Organisation for Economic Cooperation and Development's Automatic Exchange of Information (AEOI) framework.
The law paves the way for South-east Asia's biggest economy to ramp up tax collection by getting better access to information on any assets parked in jurisdictions such as Singapore and Hong Kong.
While a tax amnesty launched last year uncovered more than US$360 billion (S$491 billion), Finance Minister Sri Mulyani Indrawati estimated a further 185 trillion rupiah (S$18.9 billion) in tax revenue could be unlocked under the AEOI framework.
Indonesia, which has a poor tax collection rate, needs to shore up revenue to fund an ambitious infrastructure programme.
Singapore's Finance Ministry this month said it was ready to exchange data with Indonesia after signing a multilateral competent authority agreement last month.
The exchange can begin after the countries implement necessary laws, join a global agreement on tax disclosures and install safeguards on confidentiality and data protection.