Indonesia's Tax Amnesty Program Breaks World Record

President Joko Widodo makes an impromptu visit to a tax office in Grogol, West Jakarta, on Wednesday (28/09). (B1 Photo/Cahyo Bruri Sasmito)

By : Tabita Diela | on 4:08 PM September 29, 2016
Category : Business, Economy, Featured

Jakarta. The government's flagship tax amnesty program broke the world record for the amount of additional tax revenue it collected late on Wednesday (28/09), reflecting the public's confidence and trust on tax and economic reforms under President Joko "Jokowi" Widodo's administration.

Taxpayers signed up to the program have already declared Rp 2,963 trillion ($229 billion) of unreported assets since June, 74 percent of the government's Rp 4,000 trillion target, boosted by streams of rags and riches seeking to make their tax record straight in the past weeks. The government has also received Rp 64.9 trillion from amnesty penalty, nearly 40 percent of its target of Rp 165 trillion.

That makes Indonesia's tax amnesty program the most successful one so far in the world, Yustinus Prastowo from local policy think-tank Center for Indonesia Taxation Analysis, or CITA, said.

"This is quite an achievement, especially because we've been quite bad at managing our taxes before this," Prastowo told the Jakarta Globe.

Italy's 2009 tax amnesty program collected the equal of around Rp 1,179 trillion and pulled in Rp 59 trillion in additional tax revenue, according to data compiled by the center.

Chile's tax amnesty program last year pulled in Rp 263 trillion and collected Rp 19.7 trillion in additional tax revenue, also according to CITA's data.

Darussalam, the managing partner at tax consultancy firm Danny Darussalam Tax Center, said the sheer enthusiasm among taxpayers participating in the amnesty program reflected public confidence in the tax office and the government. "That's an intangible asset that needs to be carefully managed by the government," he said.

"This shows that we have created a healthy momentum for the rest of the program and that the public trusts us," President Joko "Jokowi" Widodo said after making an impromptu visit to a tax office in Grogol, West Jakarta.

One thing that the government still wants to rectify from the program is the fact that participants had only repatriated Rp 142.5 trillion in offshore assets, or only 14 percent of the government's target of Rp 1,000 trillion. Some of them had chosen to keep their overseas properties unreported since they intend to keep them, tax officials said.

"This is not a success, yet. We'll see what happens by March 31 next year, when the program is supposed to finish," Ken Dwijugiasteadi, the director general of taxes, said, restricting himself to a modest statement on the progress of the program so far.

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