Late rush to join Indonesia tax amnesty after $501 billion declared

Indonesian President Joko Widodo speaks about the tax amnesty program to members of the business community in Jakarta, on Feb 28, 2017.
Indonesian President Joko Widodo speaks about the tax amnesty program to members of the business community in Jakarta, on Feb 28, 2017.PHOTO: REUTERS/ANTARA FOTO

JAKARTA (REUTERS) - Hundreds of Indonesians queued from before dawn on Friday (March 31) at Indonesia's main tax office in the capital, seeking to join the final day of a government tax amnesty that has already seen nearly US$360 billion (S$502 billion) of assets declared.

The government provided makeshift tents for the crowd and Ken Dwijugiasteadi, director general of taxes at Indonesia's finance ministry, pledged staff would keep administering the last-minute rush of people until late.

"We will be open until midnight and banks will offer services until 9pm today," Dwijugiasteadi told reporters.

The amnesty programme was introduced last year as President Joko Widodo sought to cover a budget deficit and get taxpayers to repatriate previously concealed overseas assets.

The government has dubbed programme as among the most successful in the world in terms of revenue it generated. The figure reached 128 trillion rupiah (S$13.4 billion) as of early Friday.

More than 897,000 taxpayers have participated in the amnesty, declaring assets worth 4,778 trillion rupiah (S$501 billion), or 38 per cent of Indonesia's gross domestic product (GDP), government statistics showed.

The bulk of the assets were declared during the first amnesty period, in July to September, when penalty rates were the most generous.

Liana Hartanty Gunawan, a bank employee in Jakarta, said she regretted not participating earlier when she could have saved more money.

"If a tax officer looks at my tax report clearly, I'm sure I have some flaws, which could hit me later. I'd rather join the amnesty now that the tariff is still lower than normal," Gunawan said as she waited in line.

Some of Indonesia's wealthiest, including Hutomo Mandala Putra - the son of the late authoritarian president Suharto - and tycoon-politican Aburizal Bakrie, joined the amnesty in its first few months.

But the amnesty also missed some of the government's targets for revenue and repatriation.

Yustinus Prastowo, executive director of the Center for Indonesia's Taxation Analysis, said it had not been effective in getting taxpayers to bring back assets stashed abroad, with only 3 per cent of assets declared pledged to be repatriated.

"I think the amnesty is still quite successful at least in raising people's awareness in the importance of taxes for this nation and its development," Prastowo said.

After the amnesty, the government still faces an immense task of improving tax compliance, to avoid it being just a one-off windfall.