Update COVID-19 in Indonesia: 927,380 confirmed infections, 26,590 deaths (19 January 2021)
19 January 2021 (closed)
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The second phase of Indonesia's tax amnesty program ended on 31 December 2016 and therefore it is interesting to take a look at the results during this phase. In short, results are mixed. We had already reported that in terms of asset declarations, the initial target of the program was already achieved a couple of weeks ago. However, in terms of asset repatriations (into Indonesia), the program has disappointed so far, and, unless the government will introduce new policies or incentives, will not achieve the target.
Based on the latest data of Indonesia's Tax Directorate General (within the Finance Ministry), the more than 612,000 taxpayers who joined the central government's tax amnesty program had declared a total of IDR 4,295.9 trillion (approx. USD $321 billion) in previously unreported wealth by 31 December 2016, surpassing the IDR 4,000 trillion target that was set by the Indonesian government before the launch of the program in July 2016.
Meanwhile, a total of IDR 140.5 trillion (approx. USD $10.5 billion) of overseas assets were repatriated (mostly from the offshore tax havens) into the specific investment instruments that were prepared by the Indonesian government and financial authorities (by 31 December 2016). These funds need to remain in these onshore investment instruments for at least three years. However, asset repatriation realization remains far from the government's IDR 1,000 trillion (approx. USD $75 billion) target.
Although Indonesia's tax amnesty program is regarded the world's most successful tax amnesty program in terms of asset declarations, it rapidly lost momentum after the first phase as the tax (and penalty) rates are most attractive in the first phase. In the second and third phases these rates are raised and therefore it becomes more expensive for tax dodgers to "come clean".
The third - and final - phase of Indonesia's tax amnesty program started on 1 January 2017 and will run up to 31 March 2017. To read an analysis and outline of the tax amnesty program, click on this link.