Jakarta. Singapore and Indonesia said on Wednesday (12/07) they are ready to share financial data automatically for tax purposes, in a move that could help Indonesia with its plans to ramp up taxation.
The Indonesian government, seeking to fund infrastructure projects, launched a tax amnesty scheme last year to bring back billions of dollars stashed abroad.
Most of the offshore assets declared by taxpayers during the amnesty program were kept in Singapore, with total previously hidden assets valued at Rp 741.6 trillion ($55.5 billion). About 11 percent of those assets were expected to be repatriated back to Indonesia.
On Wednesday, Singapore's Ministry of Finance said in a statement the city-state "is ready to have an Automatic Exchange of Financial Account Information (AEOI) relationship with Indonesia".
Singapore signed a Multilateral Competent Authority Agreement (MCAA) on June 21 under which it listed Indonesia as one of its intended partners, the ministry added.
The MCAA will facilitate the automatic exchange of financial account information and avoid the need for separate bilateral competent authority agreements to be concluded.
Indonesia had previously pursued a bilateral agreement with Singapore, having already signed one with Hong Kong in June.
On Wednesday, Indonesia's Finance Minister Sri Mulyani Indrawati and Singapore's Senior Minister of State for Law and Finance Indranee Rajah met on the sidelines of an International Monetary Fund tax conference in Jakarta.
"By automatically exchanging information with Singapore, we can detect our taxpayers that are doing cross country businesses and we can...know how much tax liabilities that they have to pay," Sri Mulyani told reporters after the meeting.
Singapore and Indonesia are both signatories to the AEOI led by the Organisation for Economic Co-operation and Development.
Both countries can commence to exchange financial information starting next year if they have introduced the necessary legislation to implement the AEOI and ensure data protection, Sri Mulyani said.