Indonesia's decision to grant a tax amnesty aims to enlarge the national tax base and give local firms a chance to be transparent, said a former trade minister.
Dr Mari Pangestu, a highly regarded economist who served as trade minister for former president Susilo Bambang Yudhoyono, addressed reporters' questions yesterday regarding the amnesty.
Details of the move were unveiled last month. Assets repatriated to Indonesia by March next year will enjoy tax rates of only 2 per cent to 10 per cent.
"I think we should look at the tax amnesty issue as part of a wider agenda. It's not just about declaration and repatriation, and making sure our revenue target is met," Dr Pangestu said. "It's part of a bigger fiscal policy reform, which is not unrelated to the exchange of information and common reporting system by 2018."
She said the move could help Indonesia be more competitive. "It's not just about foreign assets abroad, it's more about domestic assets and SMEs that now have the possibility to declare - many don't have a tax number."
She declined to comment on the impact on Singapore's banking sector, but noted that President Joko Widodo had said on Monday that the government would propose a cut in the corporate tax rate to lift competitiveness once the tax amnesty expires.
Consultants, lawyers and bankers have suggested that the amnesty could trigger an outflow from Singapore's wealth management industry.
Lee Xin En