Seeking for the right sink for ‘tax amnesty inflow’

Anton Hermansyah & Arif Gunawan S.

While the deadline of the tax amnesty bill deliberation is in jeopardy, a polemic has raised on the amount of penalty imposed to the tax evaders. But let us not forget about another important question: where the tax-amnesty inflow will be poured into?

The bill, which aimed to repatriate Indonesian tax payers asset kept abroad, is targeted to be deliberated into law this May, which means only 18 days left to do that as of the issuance of this article today.

Meanwhile, the polemic in Indonesian media outlets recently were on the amount of the penalty, and tended to neglect another question on how to make the tax evaders’ assets can be used to jack up the economy, instead of creating additional burden to the government.

HSBC Indonesia Head of Global Market Ali Setiawan said the priority of tax amnesty was to send Indonesians’ fund kept in foreign countries back to the country. The larger the asset can be repatriated, the bigger the chance for Indonesia to grab new source of fund for development.

"Then, the key will be in the instruments. We need to provide them with government bonds and municipal bonds that can be used to finance the infrastructure, or to deposit them in the banks," he said.

However, the process is actually easier said than done, according to Ali. Without a proper preparation, the inflow—which previously predicted to reach Rp 80 trillion (US$6 billion), could end up as a new burden for the government as it is mostly in foreign currency.

"We have a limited amount of US dollar denominated government bonds, while the corporations are less aggressive in expanding global bond. If they go to the bank, we will see excessive trillion US dollar of third party fund that will be difficult to be channeled in local projects as most of the loans are in rupiah," Ali said.

Tax observer Yustinus Prastowo viewed the repatriation fees in the tax amnesty program is too small and there should be a higher differences between non repatriation and repatriation fees.

Based on the latest publicized draft of the bill, if a taxpayer want to do repatriation he will need to bring the money to Indonesia, pay the repatriation fees, and retain the money for three years. The repatriation fees is one, two, and three percent depends on how late he do the repatriation from the tax amnesty start. If no repatriation (only declaring assets without bring it to Indonesia) the fees will be two, four, and six percent.

"It is too small, it should be five percent for repatriation and ten percent for non repatriation or three and seven percent if has to be smaller," he said.

According to him a big difference will make people to choose repatriation instead just state and keep the assets abroad. However businessman Sofjan Wanandi got different view, the fees should be as low as possible.

"The higher the tariff the lower the repartiated assets come to Indonesia. The important thing is the availability," Sofjan told thejakartapost.com on May 12.