VP Kalla Reminds Tax Dodgers That They Can’t Escape Automatic Exchange of Information
Jakarta. Tax dodgers and taxpayers who have underreported their wealth in the past and who now seek to rectify the situation should join the tax amnesty program as they will not be able to hide once a system for the automatic exchange of financial information between states comes into effect in 2018, Vice President Jusuf Kalla said.
“Why do we have to do [the tax amnesty program] now? Because if we do it in the next two years, the tax dodgers will become a global enemy,” Kalla said.
The Automatic Exchange of Information (AEOI) framework is a single global standard for financial account information that will allow the government to have greater access to its taxpayers’ financial records in other countries.
At least 101 jurisdictions have committed to the automatic exchange of financial information by 2018.
A total of 54 countries – including tax haven, the Cayman Islands, which does not collect corporate taxes – agreed to start exchanging information from early 2017, while Indonesia and 46 other countries – including the Bahamas, China, Hong Kong, Singapore and Australia – agreed to start doing so by 2018.
Even Panama, the country at the center of the recent scandal involving a data leak from law firm Mossack Fonseca of the names of wealthy individuals hiding their wealth offshore, has pledged to join the AEOI framework by 2018.
The shared information will include personal identification – such as names, addresses, taxpayer identification numbers, places and dates of birth – account numbers, names of the financial institutions that report the taxpayers’ data and details of taxpayers’ financial information.
“The AEOI allows us to verify [reports of tax avoidance], while the tax amnesty program gives taxpayers a chance to come clean about their assets, whether to repatriate or not,” Finance Minister Sri Mulyani Indrawati said during a recent press conference.
According to real-time data provided by the Ministry of Finance, Indonesian taxpayers have so far reported Rp 3,626.2 trillion ($280 billion) in previously unreported assets, repatriated Rp 137.2 trillion of that and paid Rp 89.2 trillion in tax on those assets.
The government’s target is to see the declaration of Rp 4,000 trillion in assets, the repatriation of Rp 1,000 trillion and Rp 165 trillion in additional tax revenue from the amnesty program by March 2017 when the program will end.
“The government wants more repatriated assets, but the law gives an option with different tariffs as a consequence,” the minister said. “Indonesia’s economy will not become closed and restrictive, but the relationship with foreign countries will occur based on mutual trust and mutual benefit.”
