Gov't Gives Tax Office Access to Accounts at Financial Institutions

Indonesian President Joko "Jokowi" Widodo has signed a regulation to give tax authorities access to information on accounts held at financial institutions, including banks, a tax office spokesman said on Tuesday (16/05). (ID Photo/David Gita Roza)

By : Gayatri Suroyo | on 10:44 AM May 17, 2017
Category : Business, Economy, Featured

Jakarta. President Joko "Jokowi" Widodo has signed a regulation to give tax authorities access to information on accounts held at financial institutions, including banks, a tax office spokesman said on Tuesday (16/05).

A copy of the government regulation showed it was signed last week as part of Indonesia's pledge to join an OECD-led global initiative, the Automatic Exchange of Information (AEOI).

The president can issue a government regulation in times of emergency. It becomes effective immediately, although the House of Representatives must debate and vote on the regulation during its next sitting to turn it into law. If the House votes it down, the regulation is repealed.

The government considered it "very urgent" for the tax office to get wider access to financial data, according to the regulation. Failure to meet AEOI commitments could lead to significant losses and disrupt stability in Southeast Asia's largest economy, it said.

The regulation calls on banks, insurance companies and other financial institutions to report client information — including cash balances and financial gains from assets — as required under international standards, and for the tax office to share the information with authorities in other countries.

The tax office can also ask for financial institutions to share information for tax collection purposes.

Previously, under laws protecting banks and other financial institutions, the tax office had to file a request to the Financial Services Authority (OJK) to get access to a tax payer's accounts, and only for the purpose of an investigation.

The process could take more than six months and in some cases allow people to cover up possible evidence of tax avoidance, tax officers have said.

Under the new rules, financial institutions still have to file their report through OJK and the regulator will then give the data to the tax office within a certain time period.

President Jokowi has made reforming the country's tax system one of his administration's top priorities and last year launched a tax amnesty.

The nine-month amnesty, which ended in March, generated Rp 135 trillion ($10.16 billion) of additional tax revenue to the government, equivalent to 1.08 percent of GDP.

Almost 1 million tax payers joined the program, declaring 4,881 trillion rupiah of previously concealed assets, including offshore assets that were mostly kept in Singapore.

Reuters

 

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