Indonesia uncovers nearly $600 mln in first month of tax amnesty

Indonesia’s second tax amnesty programme in the space of five years has unearthed nearly $600 millionof unreported assets in its first month, official data showed,as some analysts warned against repeating such programmes too often.

President Joko Widodo launched the six-monthtax amnesty on Jan. 1, thoughdid not announce a target for asset declaration or revenue.

The programme allows participants of the president’s first tax amnesty, held for nine months in 2016 to 2017, to disclose any assets not declared in the first round. Taxpayers can also declare un-reported assets acquired between 2016 to 2020.

Authorities will regard declared assets as additional income and tax them at between 6% to 18%, far higher than penalty rates in the earlier amnesty.

The government described the first amnesty as one of the world’s most successful after it uncovered more than $300 billion of assets, resulting in more than $9 billion in revenue from penalties.

Both amnesty programmes were aimed at improving compliance in a country where less than half of the workforce are registered taxpayers.

Official data showed 9,276 taxpayers joined the programme in January, declaring 8.47 trillion rupiah ($590.94 million) of assets and with 903 billion rupiah ofrevenue collected.

Wahyu Nuryanto, a partner at tax consultancy MUC Consulting, said while authorities had not set targets, the number of participants in January was less than 10% of the previous amnesty.

“I hope this programme can improve compliance, but this depends on, among other things, the government’s commitment to never provide amnesties in the future,” he said.

The Organisation for Economic Co-operation and Development (OECD) has previously advised Indonesia not to repeat tax amnesty programmes to avoid future evasion.

Bawono Kristiaji, a partner at tax firm Danny Darussalam Tax Centre, said the amnesty has been attractive for taxpayers, but urged the government to partner with other stakeholders to increase publicity.

Finance Minister Sri Mulyani Indrawati told a news conference on Wednesday authorities would keep promoting the amnesty.

“We will also remind all taxpayers across Indonesia, individuals and companies, to improve compliance,” she said.

($1 = 14,333.0000 rupiah)



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