House passes Perppu on financial information access for taxation

Jakarta (ANTARA News) - The House of Representatives (DPR), at a plenary session here on Thursday, passed Perppu Number 1 of 2017 on access to financial information for taxation purposes into law.

In response, Finance Minister Sri Mulyani noted that the passage of Perppu Number 1 of 2017 was a manifestation of the concrete support of the DPR to Indonesias commitment to implement the international agreement on transparency in financial information for taxation purposes and efforts to boost state revenue collection from taxes for ensuring more extensive equitable development across the nation.

"The passage of the Perppu into law will give confidence to the international community that Indonesia is able and has been ready to start the implementation of the Automatic Exchange of Financial Account Information (AEOI) in September 2018," Minister Mulyani remarked.

It will also clear doubts over Indonesias commitment to increasing transparency in the financial sector for taxation purposes, she added.

Mulyani said the passage of the Perppu will minimize the room for tax payers to avoid paying taxes and fight efforts to divert funds out of the country.

"By participating in the AEOI, Indonesia will automatically receive the financial information of Indonesian tax payers who stash their money in the AEOI partners, a practice that has so far been difficult to detect by the Directorate General of Taxation," she noted.

Some 9 out of the 10 political party factions in the DPR firmly supported the passage of the Perppu, thereby leaving the Gerindra party faction as the only one to not explicitly support it.

It cited the reason that overcoming fundamental problems in the taxation sector necessitated more thorough discussions on the revision of law on general provisions and taxation procedures (KUP).

The finance minister, representing the government, stated that it will accommodate various suggestions that represent the aspirations of the factions in the Houses Commission XI through the application of the substance contained in the implemented regulation and by setting up procedures for the regulation.

The notes include the account balance threshold, data security, immunity of officials, integrity of tax officials, revision of penalty in the KUP law, and the impact of transparency in bank information on tax receipts.

The Indonesian government had earlier issued Perppu Number 1 of 2017 as the basis for the country to be able to participate in the AEOI, starting in 2018.

Based on it, for tax purposes, the government may get access to financial information from institutions conducting activities in the banking sector, capital market, insurance, and other forms of financial services and entities categorized as financial institutions in accordance with the standards of financial information exchange based on the international agreement in the field of tax.(*)

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