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Today's Headlines Tax Amnesty Bill

  • Indonesia & Hong Kong to Share Taxpayers' Bank Account Data

    Indonesia & Hong Kong to Share Taxpayers' Bank Account Data

    In its "war on tax evasion" Indonesia scored another victory by reaching an agreement ("Bilateral Competent Authority Agreement") with Hong Kong to share data of Indonesian taxpayers who hold accounts in the Asian wealth management hub. Indonesia's Tax Office assumes (or better: knows) there are plenty of wealthy Indonesians who take advantage of the low tax regime in Hong Kong and deliberately do not report these funds to Indonesian authorities.

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  • Property Sector of Indonesia Subdued, Tax Amnesty to Impact?

    Property Sector of Indonesia Subdued, Tax Amnesty to Impact?

    After the ending of Indonesia's tax amnesty program, property players in Southeast Asia's largest economy remain optimistic that inflows of fresh funds - originating from the tax amnesty program - will give a boost to Indonesian property sector in the second half of 2017. This should then cause some momentum, meaning property developers dare to kick-start new projects. Considering weak demand for property in Indonesia over the past couple of years, many local property developers have been postponing projects.

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  • Tax & Transparency: No More Banking Data Secrecy in Indonesia?

    Tax & Transparency: No More Banking Data Secrecy in Indonesia?

    After decades of the "banking information secrecy" culture in Indonesia, local banks now seem more willing to share clients' financial information to tax authorities (both local and foreign authorities). Earlier, Indonesian banks were reluctant to disclose this information as such transparency could mean banks would lose valuable clients. These "big clients" supply over half of banks' deposits. However, the situation has now changed due to the government's tax amnesty program.

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  • Tax Revenue Target Indonesia 2017: Government Eyes 16.8% Growth

    Tax Revenue Target Indonesia 2017: Government Eyes 16.8% Growth

    The government of Indonesia is confident that it will collect IDR 1,498.9 trillion (approx. USD $112.7 billion) in tax revenue in 2017, up 16.8 percent from tax revenue realization of IDR 1,283.6 trillion in 2016. Meanwhile, in its latest Indonesia Economic Quarterly, released earlier this week, the World Bank stated that the 2017 State Budget of Indonesia is a more realistic one (compared to tax revenue targets in recent years). However, it emphasized further tax administration and policy reforms are required to meet the new target and to further improve fiscal policy credibility.

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  • 2nd Phase Indonesia's Tax Amnesty Program Ended, What's the Score?

    2nd Phase Indonesia's Tax Amnesty Program Ended, What's the Score?

    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.

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  • Tax Amnesty Program of Indonesia is Constitutional, Says Court

    Tax Amnesty Program of Indonesia is Constitutional, Says Court

    Indonesia's Constitutional Court declared the government's tax amnesty program as "constitutional". In July 2016 a group of legal activists had filed for a judicial review of the central government's tax amnesty program on claims that the program would turn money laundering into a legal practice, would protect criminals, would teach Indonesian citizens not to pay taxes, and would generally constitute an unfair program from a social point of view. The court rejected these arguments.

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  • Indonesia's Rupiah Strengthening Sharply vs US Dollar, Why?

    The Indonesian rupiah has been appreciated significantly over the past two days versus the US dollar. By 12:00 noon local Jakarta time on Wednesday (07/12), Indonesia's currency had strengthened 0.29 percent to IDR 13,331 per US dollar (based on the Bloomberg Dollar Index). Meanwhile, Bank Indonesia's Jakarta Interbank Spot Dollar Rate (JISDOR) appreciated 0.51 percent to IDR 13,336 per US dollar today. Lets zoom in on this performance.

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  • Update Tax Amnesty Program Indonesia: Disappointing 2nd Phase

    Update Tax Amnesty Program Indonesia: Disappointing 2nd Phase

    The first phase of Indonesia's tax amnesty program was a success in terms of tax declarations and state revenue (penalties). Fund repatriations, on the other hand, were disappointing as - apparently - Indonesian tax payers find it not attractive enough to transfer these funds into Indonesian investment instruments or lack confidence in Indonesia's political and financial stability (perhaps still haunted by traumas from the Asian Financial Crisis in the late 1990s). However, Indonesian Finance Minister Sri Mulyani Indrawati remains optimistic that repatriations will rise soon now the winner of the US presidential election is known.

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  • Tax Amnesty Indonesia: Regulations for Asset Repatriations Eased

    Tax Amnesty Indonesia: Regulations Asset Repatriation Eased

    Indonesia's tax amnesty program, which was launched in July 2016 and will run until 31 March 2017, can be labeled a success. Up to 16 October 2016, a total of IDR 3,842.9 trillion (approx. USD $296 billion) worth of assets (either at home or abroad) have been declared to Indonesia's tax authorities nearly achieving the government's target of IDR 4,000 trillion. However, asset repatriations (from the so-called tax havens) are not a success, being far from the government's initial projection and therefore Indonesian authorities are now easing regulations.

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Latest Columns Tax Amnesty Bill

  • Indonesia's Tax Authorities Can Monitor Taxpayers' Bank Accounts

    Indonesia's Tax Office now has more power to check whether people and companies indeed pay taxes. Last week the Indonesian government basically scrapped the existence of banking data secrecy by introducing a new regulation that gives the nation's tax authorities access to information on accounts held at financial institutions, including bank accounts. The new regulation should contribute to a more transparent financial system and boost the government's (much-need) tax revenue realization. However, Indonesian parliament still needs to approve the new regulation.

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  • Tax Amnesty Program Indonesia Ended, What Are the Results?

    Tax Amnesty Program Indonesia Ended, What Are the Results?

    Indonesia's tax amnesty program ended on 31 March 2017, so now it is time to take a look at the results. Although Indonesia's amnesty program has been labelled as one of the most - if not the most - successful amnesty programs ever around the globe (in terms of asset declarations), there is plenty of room for disappointment. Based on data from Indonesia's Tax Office, less than one million Indonesians joined the program. For many nations this would be a great number. For Indonesia this number means tax evasion remains rampant, implying the government misses out on much-needed tax revenue.

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  • Indonesia's Tax Amnesty Program to End Soon, Any Structural Impact?

    Indonesia's Tax Amnesty Program to End Soon, Any Structural Impact?

    Indonesia's tax amnesty program will end soon. The nine-month program was designed to finish on 31 March 2017. Although the program has become the world's most successful tax amnesty program, it will fail to solve Indonesia's tax revenue collection problems. And with tax revenue being the largest source for public spending capacity, low tax compliance in Southeast Asia's largest economy obstructs more rapid development of the Indonesian economy.

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  • Tax Amnesty Funds Yet to Impact on Indonesia's Property Sector

    Tax Amnesty Funds Yet to Impact on Indonesia's Property Sector

    The tax amnesty program of Indonesia is yet to have an impact on Indonesia's property sector. Earlier, analysts and stakeholders expected part of the asset repatriations into Indonesia (under the government's tax amnesty program) to flow to property, either property ownership or property development projects. Although tax declarations and additional government revenue under the amnesty program were a success, the repatriation of assets that were stashed overseas has been weak. However, some stakeholders are optimistic that repatriated funds will flow to Indonesia's residential property in Q2-2017.

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  • Budget Deficit of Indonesia Under Control Thanks to Tax Amnesty

    Budget Deficit of Indonesia Under Control Thanks to Tax Amnesty

    Indonesia's budget deficit in 2016 is estimated to have reached 2.46 percent of the nation's gross domestic product (GDP), below the government's forecast of 2.7 percent of GDP and at a safe distance from the legal cap of 3.0 percent of GDP that is stipulated by Indonesian law. This is a positive matter that is supported by modestly growing tax revenue. In full-year 2016 tax revenue realization reached IDR 1,105.2 trillion (approx. USD $83 billion), only 81.6 percent of the target that was set in the Revised 2016 State Budget (APBN-P 2016) but slightly higher than tax revenue realization in the preceding year.

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  • Indonesia's Tax Amnesty Program: Calls for Celebration or Pessimism?

    Indonesia's Tax Amnesty Program: Calls for Celebration or Pessimism?

    After the Constitutional Court had already confirmed earlier this week that Indonesia's tax amnesty program is not in violation of the nation's constitution, there occurred a second reason for celebration related to the tax amnesty program: the total of declared assets up to Wednesday (14/12) had surpassed the government's target of IDR 4,000 trillion (approx. USD $301 billion), about 3.5 months before the end of the program. Despite this success there remains reason for pessimism.

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  • Interview with Jusuf Kalla about the Indonesian Economy

    Interview with Jusuf Kalla about the Indonesian Economy

    Throughout the year 2016 the economy of Indonesia was plagued by major challenges stemming from abroad. In fact, most countries around the globe have been busy to soften the impact of low global economic growth on the local economy. In the case of Indonesia, authorities have unveiled a series of 14 economic policy packages aimed at improving investment, trade and purchasing power. Although it remains difficult to implement these packages in full force (due to the low quality of human resources at the local government level or conflicts of interests), they have helped to push Indonesia's economic growth into higher gear.

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  • World Bank Releases October 2016 Indonesia Economic Quarterly

    World Bank Releases October 2016 Indonesia Economic Quarterly

    In the October 2016 edition of its flagship Indonesia Economic Quarterly (IEQ) report, titled "Easing Pressures", the World Bank is positive about Indonesia's improved fiscal management and its impact on the nation's gross domestic product (GDP) growth. The Washington-based institution projects Indonesia's economic expansion at 5.1 percent (y/y) in 2016. However, it emphasizes that external risks (sluggish global economic growth and global market volatility) continue to pose a threat.

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  • Analysis Indonesian Economy: GDP, Monetary Policy & Stability

    Analysis Indonesian Economy: GDP, Monetary Policy & Stability

    The central bank of Indonesia (Bank Indonesia) has become slightly less optimistic about Indonesia's economic growth in the third quarter of 2016. Bank Indonesia revised down its growth projection to below the 5 percent (y/y) mark for Q3-2016 (from an earlier forecast of 5.2 percent). However, the lender of last resort still expects to see a better performance compared to the 4.73 percent (y/y) pace posted in Q3-2015. Meanwhile, low inflation and a strong rupiah could result in another interest rate cut in Southeast Asia's largest economy.

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  • Indonesia's Monetary & Fiscal Policies Require More Harmony

    Indonesia's Monetary & Fiscal Policies Require More Harmony

    At its latest monthly policy meeting the central bank of Indonesia (Bank Indonesia) left its interest rate regime unchanged with the benchmark BI rate at 6.50 percent (this month the bank is set to adopt the seven-day reverse repurchase rate - reverse repo - as the new benchmark rate). Bank Indonesia's decision to leave interest rates unchanged was a surprise move given that the nation's inflation is low, the rupiah is strengthening, but overall economic growth has remained sluggish. This context would actually justify a moderate interest rate cut of 25 basis points.

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