Indonesia's Tax Amnesty Bill Needs more Deliberation
Due to the lengthy talks needed among the Indonesian government and House of Representatives (DPR) about the Tax Amnesty Bill, there may be a further delay in implementing the bill that was originally planned to be implemented in early 2016. The government's proposed Tax Amnesty Bill offers low tax rates (and protection from prosecution) to those who declare untaxed wealth and repatriate their funds back to Indonesia. Through this bill the government aims to finance the widening budget deficit and obtain fresh tax revenue.
According to several institutions (including Bank Indonesia) the Tax Amnesty Bill may bring home between IDR 500 trillion (approx. USD $38 billion) and IDR 1,000 trillion (approx. USD $76 billion) in offshore assets and could increase Indonesia's tax revenue by between IDR 40 trillion and IDR 100 trillion.
During negotiations in parliament the government met resistance from opposition parties related to the length of the amnesty period, the exact tax rate and its integration with the wider tax system.
It is now assumed that July 2016 is the earliest in which the bill can be implemented. As the current draft of the bill states that the amnesty period runs in the year 2016 only, it would imply that the government has six months to collect the funds. It therefore may need a revision in order to have a wider time-frame.
Read more: Tax Amnesty Bill Indonesia: Banking Sector Prepares for High Liquidity