JAKARTA (TheInsiderStories) - Indonesia is planning to impose the Automatic Exchange of Information (AEoI) standards in 2018 that would scrap banking secrecy only for foreign customers, both individual and corporations, for tax purposes.
All countries that are committed to implement the AEoI will have equal position to get information. The Directorate General of Taxation will also receive data of Indonesia citizens who are hiding their assets in tax haven countries such as Singapore, Hong Kong, Caymand Island, British Virgin Island, etc.
The tax authority will get full information of the customers, including balance of bank accounts and income sources (salary, dividend, royalty, etc) from other countries. For corporations, the tax authority will receive not only the institution’s data, but also shareholders’ information.
“You can imagine that we will be flooded by information. Later, we will cross-checked it with our tax data,” International Taxation Director, John Hutagaol, said Friday (Mar 3).
Domestic customers of banking industry will not be included for AEoI standard. It is because the tax authority already has fast access to collect information from banks with digital application.
“It takes about six months before, but now it can be obtained only six days,” Ken Dwijugiastedi, Director General of Taxation said.
The tax authority guarantee that data would not be shared to public. Regulerly, the IT expert team from Global Forum which consist of OECD countries and jurisdictions, assessed tax system of members, including Indonesia. “Banking secrecy is a crown. We respect that. But there are special privileged rights for tax purposes,” John added.
He said he is not worried that the implementatino of the policy will trigger capital outflow Indonesia.
So far, a total of 101 jurisdictions have been committed to impose the AEoI standards with 54 of them, including British Virgin Island and Caymand Island, become early adopters or are ready to implement the policy in 2017.
Meanwhile, Indonesia join along Singapore, Hong Kong, and Malaysia to implementing them in 2018.
“As for Indonesia, implementing the AEoI standards will strengthen our credibility in the world,” he said.
Therefore, Indonesia has a tight deadline because there are some laws that protect banking secrecy, namely the Banking Law, the Sharia Banking Law, the Capital Market Law, and the General Taxation System Law.
The government is planning to issue urgent regulations in the form of a regulation in lieu of law (Perppu) to revise those laws.
“For me, Perppu is still second best solution, therefore, we support the effort of the government to increase taxation base” Andreas Susetyo, lawmaker from the Indonesian Democratic Party of Struggle (PDI-P) said. PDI-P is the largest party in the parliament.
Deputi Secretary General National Banks Associaton (Perbanas) Anika Faisal said banks support the government policy to open foreign customers information. Since 2010, banks have experience to make reports based on Foreign Account Tax Compliance Act (FATCA), which was driven by US.
Unlike AEoI, FATCA forces banks which are operating in another countries to report US citizen data to the Internal Revenue Service (IRS), the US tax body.
“We usually made hundred reports in a month because we have a lot of secret data. So, it is not problem for us to make another additional report,” Anika said.
The important thing for banks is there are clear guidelines to make common reporting standards (CRS), which is required by the AEoI standard. The Financial Services Authority (OJK), in collaboration with the tax authority, is finalizing the circular letter which will guide banks to make proper reports.
“Its very detail. Banks, brokerage firms, insurances services, and other financial services body must report to us before we send it to the Directorate General of Taxation,” Eddy Manindo Harahap, OJK Deputy Director of Commercial Bank Regulation said. (RF)