President supports implementation of automatic exchange of financial information

President Joko Widodo remarked that Indonesia supports the implementation of automatic exchange of financial information in tax matters between countries.

This, he said, would lead to enhanced income for the developing countries.

“Indonesia encourages an international tax system that is fair and transparent,” President Joko Widodo said in his speech during the G20 Summit here on Monday.

The president urged that no country should formulate policies that can harm other countries.

“Considering the global economic slowdown, Indonesia has committed to increase its tax revenue to maintain a positive business and investment climate. It requires international tax system that is fair and transparent,” the president affirmed.

The international cooperation in the tax system could encourage tax policies among member countries that are aligned.

The president believed that such a system could ultimately increase revenue for developing countries.

Therefore, he supported cooperation and coordination among the member countries to achieve this goal.

“Automatic Exchange of Information (AEoI) can address illicit financial flows that have been causing losses to developing countries over the years,” he noted.

The president also urged for cooperation to eradicate corruption.

“Indonesia is an example of a country that is eradicating corruption actively,” the president stated.

The president pointed out that Indonesia has made efforts of various kinds to increase transparency in the private sector and to ensure that the country develops a value system against corruption.

With regard to taxation, the president reiterated that Indonesia has been able to boost its economy through reforms in the tax system and introducing tax incentives for investors to prevent double taxation.

“If the tax system reforms are implemented properly, other countries may also follow,” the president added.

On the occasion, the president also lauded the efforts of the United States President Barack Obama, who could accelerate global economic recovery.

Indonesia will be among the first to join the group of countries adopting the Automatic Exchange of Information (AEOI) system in 2018.

AEOI would provide for automatic exchange of tax information among the members of the group. All bank accounts in the world would be accessible for taxable assets.

Dishonest and greedy tax payers, therefore, would have no easy way to escape tax investigators.

Indonesians who were used to parking money abroad and gained from tax evasion might have to spend long sleepless nights if they continue pursuing such tactics.

No one would be able to stash away assets in foreign banks to avoid paying tax, an official said.

Finance Minister Sri Mulyani Indrawati, while trying to popularize the tax amnesty program at the Kemayoran JIExpo, Jakarta earlier this week, warned tax payers not to try to hide assets.

“Soon, with the AEOI, no place would be safe enough for tax evasion. In the past, delinquent tax payers might have been able to safely hide their assets abroad as we were powerless beyond our borders,” the minister stressed.

Countries had a limited ability and determination to follow complicated procedcorruptionures. Indonesia has not enough bargaining power to demand information about the assets owned by its citizens abroad.

Now, however, there is a tendency among finance ministers of all countries to rely more on tax for income and that is why they agreed on a new standard of exchange of information through AEOI on the initiative of the Organization of Economic Cooperation and Development (OECD).