The government hopes to receive Rp165 trillion in taxes from tax redemptions and asset declarations of the repatriated money. Money to be obtained from the tax amnesty program is accounted for in the 2016 Revised State Budget (APBNP 2016).
Finance Minister Bambang Brodjonegoro had previously forecast that taxpayers registering for the tax amnesty program would declare overseas assets of up to Rp4 thousand trillion, while the income flow of repatriated funds is expected to reach Rp1 thousand trillion.
The amended state budget has a deficit of Rp296.7 trillion, with a target for state income and grants totaling Rp1,786.2 trillion and state expenditures totaling Rp2,082.9 trillion.
The state income includes the Rp165 trillion in taxes expected from the repatriation of capital during the tax amnesty period, which will remain in effect until March 2017.
Brodjonegoro said he would select investment management companies and banks to accommodate the repatriated funds.
"We will carefully select investment management companies and banks," the minister stated last month.
The Financial Service Authority (OJK) noted on Monday it was ready to accommodate the funds. "It is expected to encourage positive sentiments in the capital market," head of the capital market supervision department of the OJK Nurhaida added.
She said policy concerning investment instruments such as the Fund Management Contract (KPD) should be prepared. The policy is expected to relax the amount of investment required from Rp10 billion to Rp5 billion.
"In the capital market, we are ready to accommodate the funds. They can be accommodated through the KPD, limited participation mutual fund and real estate investment fund," she remarked.
Readiness to accommodate the repatriated funds was also expressed by the Indonesian Stock Exchange (BEI), which is also ready to provide an investment instrument for the capital market.
President Director of BEI Tito Sulistio said on Tuesday the BEI now had a velocity ratio of 21 percent, which enables it to accommodate the inflow of trillions of rupiah from the tax amnesty program.
"We have strong market capitalization and are ready to accommodate the funds. We are ready to accept Rp60 trillion per day," noted Tito Sulistio.
In the meantime, a number of legislators have questioned the effectiveness of the Tax Amnesty Law in facilitating repatriation of assets stashed abroad as experience of other countries shows such an amnesty has little impact.
"If we see the experience of many countries, we will learn that tax amnesty led to more failures than successes. Therefore, we should be careful while taking this step," Hendrawan Supratikno, a member of Commission XI on financial affairs of the House of Representatives (DPR), said here on Wednesday.
He demanded that the government should implement the Tax Amnesty Law seriously and ensure it is implemented on the ground properly.
Supratikno, a politician of the Indonesian Democratic Party of Struggle (PDIP), reminded that Indonesia had adopted the same approach in 1964 and 1983 but it had failed because the political conditions in the country at that time were not conducive.
Ecky Awal Mucharam, also of Commission XI, said there were many studies indicating that tax amnesty was not a good policy. "Tax amnesty hurts those who obediently pay taxes," argued Ecky.
Ecky, who is also a politician of the Prosperous Justice Party (PKS), noted that most Indonesian taxpayers who pay their sales tax and income tax will be hurt if tax amnesty is granted to those who did not report their assets worth thousands of trillions of rupiah, stashed at home and abroad.
He also took into account the potential losses that the state will suffer as a result of the tax amnesty. These could reach 30 percent of the non-taxable income. A 48 percent fine is applicable on the payable tax principals besides criminal punishment for tax dodgers.
He claimed that the loss was not comparable to the amount of taxes the state would receive after the Tax Amnesty Law comes into effect as the amount of tax redemption was only about 1-6 percent.
"Successful implementation of tax amnesty is rare. Of the countries which implemented tax amnesty, only half of them claimed it was successful," Ecky reiterated.
He also reminded that it was impossible for tax amnesty to be successful without improvement in tax administration, strengthening of tax institutions and enforcement of law.
Awan Santosa, an analyst from the Peoples Economic Study Center of the Gajah Mada University, said potential revenue that the state may earn as a result of tax amnesty worth Rp165 trillion are not comparable with the estimated suspicious assets of Rp4,500 trillion to Rp11,400 trillion stashed away abroad over decades.
If the money was earned as a result of crime or embezzlement of state funds, then the owners of these assets should be seen as having committed crimes and responsible for impoverishing the people, he underlined.
"The state should never give in to individuals' interests," he urged.
As was reported earlier, President Joko Widodo (Jokowi) had said the government would soon publicise the Tax Amnesty Law so that those who have stashed assets abroad come to know about it.
"Thank God, the DPR has endorsed the tax amnesty law and the government will now publicise it among those known to possibly have assets overseas," Jokowi mentioned after breaking the fast together with the orphans and disabled people at the Bogor Presidential Palace, West Java, on Tuesday.
The president informed that he had ordered ministers and other parties, such as Bank Indonesia (the central bank) and the Financial Service Authority (OJK), to follow up on the endorsement of the Tax Amnesty Law.(*)
Reporter: Andi Abdussalam
Editor: Heru Purwanto
Copyright © ANTARA 2016
