After its successful tax amnesty program (July 2016-March 2017) and its participation in OECD's Automatic Exchange of Information (AEOI), an initiative for tax information exchange among 100 jurisdictions designed to reign in tax evasion across the world, the latest agreement with Hong Kong is a new step in Indonesia's battle against tax fraud.

The so-called "Panama Papers", which involved the leaking of 11.5 million documents of Panamanian law firm Mossack Fonseca in 2016, showed Hong Kong tops in terms of secretive offshore financial services. These services usually involve the establishment of shell companies. This is not necessarily illegal, but it is widely known that these shell companies are used to hide assets for the purpose of tax evasion.

Data obtained through Indonesia's tax amnesty program show Hong Kong was the third-largest source of repatriated funds at IDR 16.31 trillion (approx. USD $1.23 billion). Meanwhile, the tax amnesty participants declared a total of IDR 58.15 trillion worth of assets in this Chinese territory.