JAKARTA (TheInsiderStories) – Indonesian President Joko Widodo on Thursday (1/3) has officially issued a decree to rule ‘Beneficial Ownership’ to meet on Automatic Exchange of Information (AEoI) assessment this year.
Beneficial owners are widely defined as a person who ultimately control a corporate entity, even though they are not necessarily recorded as the legal owner of the
To mention few, Singaporean law system defines beneficial ownership (BO), in the context of relation of a customer to a bank, as the natural person who ultimately owns or controls the customer or the natural person on whose behalf a transaction is conducted or business relations are established, and includes any person who exercises ultimate effective
control over a legal person or legal arrangement.
A similar definition has also been adopted by European Union through their Anti-Money Laundering Directives (AMLD) Framework in broader context, where UBO (Ultimate Beneficial Owner) is defined as any natural person who ultimately owns or controls the customer (corporate or legal entity) or the natural person on whose behalf a transaction or activity is being conducted.
Minister of Finance Sri Mulyani outlined the transparency of the BO plays a crucial role to reduce the use of corporations as a vehicle to conduct law infringements since increasing the state revenue has been one of the main national agenda during Joko
Widodo’s presidential era.
The recent tax amnesty program is one of the breakthrough effort by the Ministry of Finance to attract offshore assets that are owned by Indonesian tax residents, offering low fines for convictions made.
There are several activities which may be hampered by the lack of the transparency of the BO. Merger and acquisition may be harmful if the companies involved belong to several people beneficial owners and the authority does not have the capability to trace the information of the beneficial owners of the companies.
Many taxpayers have used the beneficial ownership system, which involves controlling companies without being listed as shareholders, to avoid taxes.
Financial Transaction Reports and Analysis Center legislation deputy director Fithriadi has said that by becoming a beneficial owner, people did not state their ownership or income in their tax form, but they received payments from the company.
He said the system was not only used by people to avoid paying taxes, but it was also used by corrupt people to avoid legal charges.
Citing an example, he pointed to a corruption case of videotron procurement in 2012 in the Cooperatives and Small and Medium Enterprises Ministry. The convicted person had listed his office assistant as the president director of his company in an attempt to avoid legal charges.
Transparency International Indonesia researcher Wahyudi Tohari said that global money laundering amounted to around US$800 billion to $2 trillion per year.