JAKARTA (TheInsiderStories) - Indonesia government is considering to set up a trust fund to manage the repatriation of assets following the planned implementation of tax amnesty law, Coordinating Minister for Economic Affairs Darmin Nasution said.
He said there is a concern that if the funds are not kept well, the fu ds could create bubble in domestic economy.
Previously, Finance Minister Bambang Brodjonegoro stated the government also explores possibility to create offshore finance center and also allow local companies to set up special purpose vehicle (SPV) inside the country.
On Monday, Commission XI of Indonesia parliament has agreed to bring the tax amnesty bill to plenary meeting after discussing the bill in a month since May 23. The bill is scheduled to be approved at a plenary meeting of the House of Representative on Tuesday before implementing policy starting July 1 and last until March 31, 2017.
The bill is designed to make it attractive for tax evaders to come clean, declare and repatriate their funds into Indonesia.
“We’ve already discussed the draft of the tax amnesty from May 23 to June 24. Based on the House Factions’ decisions, we give our approval on the bill and is ready to be submitted to the Plenary meeting tomorrow,” Achmadi Noor Supit said at a hearing with Finance Minister Bambang Brodjonegoro and Minister for Justice and Human Rights Yasonna Laoly.
Chairman of Tax Amnesty Committee Bill of the House Supriyatno stressed, the redeem tariff for repatriation rate is set at about 2 percent in the first period, 4 percent for the next quarter and 6 percent in the last quarter on March 2017.
While, for the declared rate is ranging from 4 for the first quarter, 6 percent for the second quarter and 10 percent in the first quarter of 2017.
He added, for the small and medium enterprises, the redeem tariff is set at 0.5 percent for a company which has total assets of between Rp4.8 billion to Rp 10 billion and more than Rp10 billion is set about 2 percent.
“The company could redeem the tax revenues, value-added tax and value-added of luxury tax that unreported yet,” Supriyatno said.
He elaborate that the repatriation of assets is hold for three years including real sector, direct investments, marketable securities, bank deposits, government bonds and other assets.
Bambang welcome the Commission XI decision and expects the Plenary meeting will enact the bill. He state that his office had discussed with the Governor of Bank Indonesia and Chairman of Financial Services Agency 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.
The government assumption could bring back repatriation assets Rp 1,000 trillion and Rp 4,000 trillion declared tax. From there, the state expect to raises revenue tax above Rp100 trillion.
To keep the fund stay in Indonesia, the government is exploring possibility to set up an offshore financial center after the tax amnesty is implemented in the country. Bambang said the government, is still exploring the final concept of the offshore financial center for Indonesia.
“It is like a tax haven area that can accommodate Indonesian companies that have business abroad with lower tax,” He stated.
Currently, Indonesia’s tax-to-GDP ratio is very low at around 11 percent. Indonesia has a population of over 255 million people and there are only 27 million registered tax payers and only 10 million actually fulfill their tax obligations.
DETAIL OF REDEEM TAX TARIFF:
Repatriation rate:
- 2% for the first three months
- 3% for the second of three months
- 4% for the third of three months
Declared rate:
- 4% for first 3 months
- 6% for the second of three months
- 10% for the third of three months