Indonesia government is preparing a number of legal measures to prevent corruption and crack down on corporate tax arrears in Southeast Asia's largest economy - Photo: Privacy

JAKARTA (TheInsiderStories) – Indonesia government is preparing a number of legal measures to prevent corruption and crack down on corporate tax arrears in Southeast Asia’s largest economy. This was marked by the signing of a memorandum of understanding (MoU) and cooperation agreement between a number of ministries in Jakarta on Wednesday (07/3).

The MoU entitled strengthening and utilizing the database of beneficial ownership in the context of preventing criminal acts for the corporation was carried out by the ministry of law and human rights, ministry of finance, ministry of energy and mineral resources, ministry of agriculture, ministry of cooperatives and small and medium enterprises, and the ministry of agrarian and spatial.

Finance minister Sri Mulyani Indrawati said the utilization of the beneficial owner’s database would complement the data that had been obtained so far through automatic exchange of information owned by the directorate general of taxes.

As a follow-up to presidential regulation number 13 the year 2018 concerning the implementation of the principles of recognizing benefit owners from corporations, this cooperation is expected to strengthen the prevention and eradication of money laundering crimes to the crime of funding terrorism.

“With this, we will get the consistency of information about who is the ultimate ownership, especially those who practice tax avoidance,” Indrawati told reporters.

The criminal practices of the corporation will also ultimately prevent the occurrence of tax escape by  of the corporation. For this reason, Indrawati advised that corporate owners begin to improve their corporate governance rather than using corporate vehicles such as shell companies or nominees.

Strengthening and utilizing the beneficial owner database is expected to maintain a conducive and attractive business and investment climate. The reason is that this requires a guarantee of trust from business actors both domestically and abroad.

“If all stakeholders in Indonesia have good principles, Indonesia will have better growth,” the minister said.

Indrawati also said the directorate general of taxation will seriously investigate Indonesian assets that are not reported through the annual tax return form, and is preparing punishment for non-compliant taxpayers.

She said the first step was to check the status of any Indonesian wealth parked overseas. Currently, we are in the process of studying the data,” she adds referring to data indicating that Indonesians have parked Rp1.3 quadrillion (US$91.3 billion) worth of assets in a number of countries, data obtained because of cooperation among countries through the Automatic Exchange of Information (AEOI) in 2018. Through cooperation, the tax office has received reports from 66 countries.

The minister also said her party was also crosschecking the data submitted by taxpayers, the tax amnesty data, data from the banks that were sent to the tax office and the data obtained through AEOI cooperation. Indrawati, however, would not say when the investigation would be completed, but she said the tax office would use the AEOI data in an optimal way.

She added that the government will have a database of beneficial owners that are accurate and easily accessible for both the public interest in business and law enforcement. In the end, this will not leave room for criminal offenders to use corporations as vehicles to cover up criminal acts and their results.

“Especially in the private sector because so far we in the public sector have been asked to do a lot of accountability transparency. But in the private sector, especially corporations, but also individually, it is also very important,” she said.

“If Indonesia has all its tax holders together, namely individuals, corporations, and the public sector have good principles, then Indonesia will be a much better country. In terms of tax collection, from the use of tax money, and how we can get each for optimal development, she concluded.

This was one stage to achieving the objectives of law enforcement and ease of business. Considering the ministry of law and human rights is the first gate in the registration of legal entities including business entities, the implementation of the cooperation agreements with six ministries can improve inter-institutional synchronized data so that it ultimately supports an integrated, transparent and legal certainty business licensing process.

The minister Yasonna Laoly said the benefit owner’s disclosure was a cover for potential loopholes in crime, given the many attempts to deceive the beneficial owner’s information through layered actions using corporate vehicles such as shell companies or nominees.

“This is a problem that must be addressed immediately, considering that effective law enforcement is one of the determinants of the success of Indonesia’s economic development,” he ended.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com