Jakarta. The government's new regulation granting federal tax authorities greater access to individual financial account information will not disrupt status quo banking activities, an economist said on Wednesday (17/05).
"The implementation of this regulation in lieu of law isn't expected to disrupt the banking sector, as most banks in OECD [Organisation for Economic Co-operation and Development] countries have implemented similar standards for information of customer accounts," said Josua Pardede, a vice president and economist at Bank Permata.
"There's only a small potential for funds to be transferred to another country, because that country would also have standards requiring open banking information," he said.
Josua said the new regulation is part of the government's commitment to adhere to the global Automatic Exchange of Information (AEOI) framework to prevent large-scale tax evasion in the country.
Indonesia and at least 101 other nations have committed to providing financial information of non-residents to their respective national tax authorities by 2018.
To fully comply with AEOI's global standards, the government should revise the Banking Law, the Shariah Banking Law, the Capital Markets Law, the Microfinance Law and the General Taxation System Law.
However, President Joko "Jokowi" Widodo issued only a regulation in lieu of drafting revisions to national laws to allow the tax office to more quickly obtain financial data.
Jan Hendra, corporate secretary at Bank Central Asia, said the lender is still studying the new regulation.
"The regulation will be adhered to by all banks, so it won't be any different," he said.
Josua and Jan's comments come after the president signed a regulation last week that will force banks, insurance companies and other financial institutions to report client information — including names, account numbers, cash balances and financial gains from assets — to the tax office.
Previously, the tax office had to request access to accounts of individuals under investigation from the Financial Services Authority (OJK) — a months-long process.
Yustinus Prastowo, the executive director of Center for Indonesia Taxation Analysis (CITA), said the new regulation needs to distinguish between residents' and non-residents' financial information.
"It's clear that the regulation will be applied in 2018 for global [accounts owned by non-residents], but it becomes effective immediately for domestic [accounts]. The government must be clear about a transition period," he said.