JAKARTA: Indonesia’s government intends to propose a “sunset policy” to encourage the declaration of unreported assets, similar to its previous tax amnesty programme but with much higher penalty rates, newspaper Bisnis Indonesia reported on Friday.
The policy will target undeclared assets using a range of rates applied under several different schemes and with an incentive to invest in government bonds, the newspaper said, citing a draft proposal that would be discussed with parliament.
A spokeswoman for the finance ministry, which has authority over tax matters, declined to comment on the report. Officials have previously said there would be an announcement regarding the government’s plan for another tax amnesty.
Earlier this week, Finance Minister Sri Mulyani Indrawati told a hearing with parliament’s finance committee the government “will focus on improving compliance without creating a sense of injustice”, but did not discuss a new tax amnesty.
Bisnis Indonesia reported penalty rates for the so-called “sunset policy” range between 12.5per cent to 15per cent of asset values for participants of a previous amnesty who still had undeclared assets as of end-2015.
It said assets not declared even after the new programme will be charged with a 200per cent fine.
A 20per cent to 30per cent penalty rate will apply for assets not yet reported in tax returns by end-2019, the paper said. Those who do not participate but are found with hidden assets will be charged 30per cent of asset value plus administrative fines.
Penalty rates would be applied at the lower end of ranges if some of the assets were put into government bonds.
The previous amnesty, launched in President Joko Widodo’s first term, was regarded as among the most successful in the world after uncovering assets worth US$330 billion. The penalty rates then were within a 2per cent to 10per cent range.
However, the programme attracted less than a million taxpayers, even though it was designed to get more Indonesians into the tax system.
Only about 40 million people are registered as taxpayers and some 12 million file tax returns in Indonesia, which is the world’s fourth most populous country with 270 million people.
(Reporting by Gayatri Suroyo and Tabita Diela; Editing by Ed Davies)
