OECD thumbs up for In­done­sia tax amnesty

> Tim­ing is good but Jakarta must tell tax­pay­ers that of­fer will not be re­peated, says or­gan­i­sa­tion

The Sun (Malaysia) - - SUNBIZ -

JAKARTA: In­done­sia must tell its tax­pay­ers that the cur­rent tax amnesty is the last to avoid fu­ture eva­sions, the Or­gan­i­sa­tion for Eco­nomic Co­op­er­a­tion and De­vel­op­ment (OECD) said in a sur­vey pub­lished yes­ter­day about South­east Asia’s largest econ­omy.

In­done­sia is of­fer­ing a tax amnesty that will run un­til March 2017, in­tended to pro­vide the gov­ern­ment with bil­lions of dol­lars in rev­enue to help cover a large fis­cal deficit and ex­pand the tax base.

The OECD said the tim­ing of In­done­sia’s cur­rent amnesty is good be­cause “it pro­vides tax­pay­ers with op­por­tu­nity to reg­u­larise past non­com­pli­ance prior to the en­try into force” of In­done­sia’s pledge to take part in Au­to­matic Ex­change of In­for­ma­tion (AEOI) on tax-re­lated ac­tiv­i­ties with other coun­tries in 2017.

“How­ever, au­thor­i­ties must com­mu­ni­cate clearly that this of­fer will not be re­peated, and that hence­forth, the AEOI will be used to lo­cate un­de­clared as­sets and that full-penal­ties will ap­ply,” it said. In­done­sia granted tax amnesties in 1984 and 2008, OECD said.

In­done­sia’s amnesty has drawn more than 420,000 par­tic­i­pants to de­clare nearly US$300 bil­lion (RM1.25 tril­lion)worth of as­sets so far. While many of­fi­cial say the fig­ures in­di­cate a suc­cess­ful pro­gramme, they also un­der­score the low level of com­pli­ance.

Only 27.6 mil­lion peo­ple are reg­is­tered tax­pay­ers out of around 115 mil­lion work­ing ci­ti­zens in the coun­try, fi­nance min­istry data showed.

The OECD warned that re­peated amnesties in OECD coun­tries have shown that amnesties tend to en­cour­age tax eva­sion once the grace pe­riod is over.

It sug­gested that In­done­sia should dis­cour­age fu­ture at­tempts to cir­cum­vent the tax sys­tem through strength­en­ing tax ad­min­is­tra­tion.

The amnesty has so far gen­er­ated 97.7 tril­lion ru­piah (RM31.3 bil­lion) in gov­ern­ment rev­enue, more than half of the gov­ern­ment’s tar­get.

OECD sec­re­tary gen­eral An­gel Gur­ria pre­sented the re­port to In­done­sia’s Pres­i­dent Joko Wi­dodo yes­ter­day and Wi­dodo told the OECD that In­done­sia would im­ple­ment re­forms in its tax­a­tion sys­tem soon, ac­cord­ing to a state­ment from the state palace.

In the same re­port, the OECD fore­cast In­done­sia’s eco­nomic growth reach­ing 5.1% this year and 5.3% next year, cit­ing down­side risks from global fac­tors. Growth in 2015 was 4.8%.

The OECD re­port also cov­ered other sub­jects, in­clud­ing some rec­om­men­da­tions on pol­icy re­forms in man­ag­ing sub­si­dies and lib­er­al­is­ing the im­por­ta­tion of food. – Reuters

REUTERSPIX

Chim­neys of an in­dus­trial com­plex and Tokyo's sky­line are seen from an ob­ser­va­tory deck at an in­dus­trial port in Kawasaki, Ja­pan.

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