Local bankers have thrown their support behind a government plan to disclose financial information to local and foreign tax authorities in a move that would end Indonesia's decades-long banking information secrecy. (ID Photo/David Gita Roza)

Banks Are All for Transparency Now, Thanks to Tax Amnesty

BY :DEVIE KANIA

MARCH 14, 2017

Jakarta. Local bankers have thrown their support behind a government plan to disclose financial information to local and foreign tax authorities in a move that would end Indonesia's decades-long banking information secrecy.

Their stance is a complete turnaround from a year ago, when the bankers invoked a secrecy clause in Indonesia's banking law to thwart the tax office's attempt to access their customers' credit card record.

What changed now is that most of the lenders' biggest customers have declared their hidden assets under the tax amnesty program, eliminating any risk that they have to pay fines when their secret banks account get exposed. After all, these major customers — who have more than Rp 2 billion ($150,000) in their bank account — typically supply more than half of the deposits kept in an Indonesian lender, making their concerns a top priority for local bankers.

"Our customers are no longer worried about disclosing their data," Irfanto Oeji, the president director of Bank Mayora, said in a recent interview.

Benny Purnomo, the president director of Bank MNC Internasional, which is controlled by tycoon Hary Tanoesoedibjo, agreed with Irfanto's assessment, saying lenders are now more inclined to comply with the government's new transparency rule.

President Joko "Jokowi" Widodo plans to issue a government regulation in lieu of law for that purpose in the coming months, bypassing the often prolonged debate in the House of Representatives if the government instead opted for proposing a bill.

Time is of the essence here because Indonesia has made a commitment to join OECD's Automatic Exchange of Information (AEOI), an initiative for tax information exchange among 100 jurisdictions designed to reign in global tax evasions, by next year.

Under the initiative Indonesia and other tax havens like Singapore, Switzerland and Mauritius will begin next year to reveal banking data to tax authorities at any moment they are noticed.

"We should applaud the government for having such an elaborate plan, for offering an opportunity for taxpayers to clear their taxes with the tax amnesty program," Benny said.

More than 687,000 taxpayers have joined the program as of Tuesday (14/03), declaring Rp 4,500 trillion ($337 billion) worth of assets that used to be hidden from the tax office.

Asmawi Syam, the president director of state-controlled Bank Rakyat Indonesia, said the lender will continue to disseminate information about the new transparency rule to its customers until the end of this month, when the tax amnesty program ends.

"Our customers who have joined the tax amnesty program should have confidence that they have done the right thing. They shouldn't be worried," Asmawi said.

Muliaman D. Hadad, the chairman of the Financial Services Authority (OJK), said the new bank transparency rule would deter tax evaders and at the same time help maintain the stability of the country's financial system.

"A financial information exchange mechanism will help Indonesia's financial sector to compete globally. Our financial system will no longer be underestimated on the international stage, as we would be implementing same standard as everybody else," Muliaman said.

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