RI to adopt financial data exchange globally
The government is looking to adopt a global standard on exchange of financial information in 2017 in the hope of addressing the country’s tax revenue issues, according to a Cabinet minister.
Finance Minister Bambang Brodjonegoro said the move would enable the government to collect financial data on accounts belonging to Indonesian citizens or corporations that are recorded overseas, as well as allowing other countries to source similar information on their own citizens or corporations in Indonesia’s jurisdiction.
“We are one of the early adopters [of the exchange system]. We will adopt it in September 2017. The US, Japan and other countries will adopt it in 2017 as well, while global implementation will occur in 2018,” Bambang said over the weekend after attending the G20 Finance Ministers and Central Bank Governors Meeting in Ankara.
The exchange is part of a new global standard formulated by G8 leaders in June 2013 and fully endorsed by G20 leaders in September that year.
By June this year, 61 countries had signed the multilateral competent authority agreement.
The exchange will provide Indonesia with more thorough information — such as information needed to pursue its tax revenues — without having to provide a case to its counterparts, as is mostly practiced at the moment.
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By June this year, 61 countries had signed the multilateral competent authority agreement.
“Many countries, including Indonesia, are combating tax evasion issues because a lot of companies or individuals put their profits elsewhere, into low- or no-tax locations,” Bambang said.
He added that such practices had caused serious base erosion and profit shifting (BEPS), resulting in low tax receipts. “For a country like Indonesia, this is a major problem because we rely heavily on tax for financing,” he said.
The BEPS was highlighted in a communiqué issued following the Ankara meeting. According to the communiqué, a final package of 15 BEPS action items is expected by October, and will be submitted to the G20 Leaders Summit in November.
Meanwhile, as previously reported, Indonesia is hoping to generate as much as Rp 1.29 quadrillion (US$90.93 billion) in tax revenues in 2015. When combined with custom and excise revenues, this year’s tax ratio is expected to climb to 13.7 percent from 13.2 percent last year.
However, the ratio is still lower than those recorded by China and Mexico, where the ratios have inched closer to 20 percent.
According to data from the Tax Office, realized tax revenues stood at Rp 531.11 trillion as of July, or 41 percent of the total target. Bambang said that the government would adjust several existing regulations, including on banking, to back up the upcoming exchange system.
He said that it had not conducted a detailed calculation of additional tax revenues that it could trace from the exchange of information, but said he was certain that the accounts of Indonesian corporations and individuals were scattered across many countries.
Contacted separately, University of Indonesia tax expert Darussalam said that he welcomed the early adoption by Indonesia, adding that the exchange of information would significantly assist the country with its tax revenues.
“There will be no place to hide for tax evaders. Countries are committed to opening their systems and providing their data,” he said.
