JAKARTA (TheInsiderStories) - Tax Amnesty bill deliberation is completed and is now ready to be enacted by the House of Representative (DPR) into law at a plenary session. Chairman of Tax Amnesty Committee Bill of the House Supriyatno said that all the House factions have agreed to extend the validity period of tax amnesty from 2016 to March 31, 2017.
As for the issue of redeem tariff, he said the House factions have agreed to set it at about 2 percent in the first period of repatriation and 4 percent without repatriation. In the following period, there is still no decision on the two options, with repatriation is ranging from 3 to 5 percent and without repatriation from 6 to 10 percent.
Finance Minister Bambang Brodjonegoro has said that the government is still sticking to the rolling of tax amnesty implementation starting from July 2016. He said the government will facilitate the mechanism as comfortable as possible for those who participate in tax amnesty scheme.
The minister also said it had discussed with the Governor of Bank Indonesia and Chairman of Financial Services Agency (OJK) on how to implement the law. In addition, he stated that the readiness of banks is one of the key success factors of tax amnesty policy.
Director General of the Finance and Risk Management Robert Pakpahan revealed that the main idea is to place the repatriation of assets in Indonesia during the holding period of three years. Various instruments are provided to the owners of the funds to invest their assets. The return of these investment instruments will follow market mechanisms.
The tax amnesty is probably one of the most controversial issues in public policy, since both the benefit and the cost are difficult to measure. In the last eight years, Indonesia has implemented two tax amnesty programs. The 2008 sunset policy allowed taxpayers to revise their previous tax return and pay no penalties.
Almost the same program was implemented in 2015 as part of the Reinventing Policy program where taxpayers could revise their tax returns on a self-assessment basis and pay only the balance of the principle amount, again without any penalty.
The two previous tax amnesty programs were considered limited tax amnesties, since they waived only penalties and interest. In contrast, the upcoming tax amnesty is considered an extensive tax amnesty since it will not only waive sanctions and interest but also, in substance, reduce the principal amounts being taxed. (*)