JAKARTA: Indonesia’s tax amnesty programme recorded around US$3.2 billion of declared assets during its first month of implementation, which was below its target of US$302 billion.
“These are still very small compared with our set targets,” said Finance Minister Sri Mulyani Indrawati in a press conference on Monday (Aug 22).
Giving an update on the ministry’s flagship program, Ms Sri Mulyani said of the total declared assets, about US$2.7 billion was declared in Indonesia, while the remaining was declared overseas.
Ms Sri Mulyani added that 82.6 per cent of assets declared were dominated by individual taxpayers.
The finance ministry said it collected about US$65 million worth of redemptions, which was only 0.5 per cent of the US$12 billion expected to be added to the government’s tax revenue by the end of the year.
Analysts said the first three months of the tax amnesty programme will be the most keenly watched as that is when those who sign up enjoy the biggest penalty cuts.
Ms Sri Mulyani believes that the figures will rise next month, because big taxpayers may have then completed their legal paperwork to participate in the programme.
Launched on July 18, the tax amnesty programme is Indonesia’s latest attempt at reforming its tax regime. It is designed for wealthier Indonesians to repatriate some of their undeclared assets. The programme runs until March next year, with penalties on repatriated funds beginning at as low as 2 per cent, before progressively rising after September 30, 2016.
Indonesia’s Finance Minister has reiterated her priorities – one of which is to improve the country’s tax revenue.
In a recent interview with the Wall Street Journal, Ms Sri Mulyani gave some hints on how she intends to enforce tax collection. She said if there are activities in the economy which are thriving, yet there is no tax being paid, authorities will start asking questions.
Indonesia is also considering cutting its corporate tax rate from 25 per cent to 17 per cent.
However, Ms Sri Mulyani acknowledged that widening the tax base at home will be difficult. Around 30 million Indonesians are registered taxpayers and only a third of those actually paid taxes last year.
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