A new regulation in Indonesia will make it compulsory for banks to relinquish credit card data to the government. (Antara Photo/Muhammad Adimaja)

Taxed Out: New Regulation Requires Indonesian Banks to Give Up Credit Card Data to Gov't


FEBRUARY 06, 2018

Jakarta. Indonesia's Finance Ministry has finally issued a regulation that will make it compulsory for banks to relinquish data about their credit card customers to the government. The data will be used as a source of information for the ministry to collect taxes, Finance Minister Sri Mulyani Indrawati said on Monday (05/01).

The regulation was initially set to be introduced in March 2016, but was held back when the Taxation Directorate General decided to turn its focus instead to the government's much-vaunted tax amnesty program.

The program encouraged taxpayers to come clean about previously unreported assets in return for "tax amnesty." The offer lasted until Dec. 31 last year.

The new regulation requiring banks to submit data on their credit card customers has now become part of Ministry Regulation No. 228/PMK.03/2017 requiring government agencies, institutions, associations and other parties to submit data and information related to taxation.

Banks must now submit details on their customers' credit card bills to the government. The required data include name, address, ID card number, monthly billing, credit limit and details of transactions.

The taxation directorate general, however, said it will only monitor users with credit card transactions of Rp 1 billion ($70,000) or above.

"There's nothing to worry about, we will start implementing this [new regulation] gradually," Finance Minister Sri Mulyani said.

Yustinus Prastowo, the executive director of Center for Indonesia Taxation Analysis, said the new requirement for banks to give up credit card data is legally sound, since such data are not classified as secret under Indonesia's Banking Act.

"Profiling can be a way to expand the tax base and improve tax compliance through adequate analysis," Yustinus said.

But according to Yustinus, the credit card data banks submit to the government should not be based on the amount charged on each bill, but on the limit of each credit card, since the bill's amount can fluctuate. This is why the threshold of Rp 1 billion should be lowered, Yustinus said.

"We'd recommend that all credit cards with a limit of Rp 100 million and above must be reported to the Taxation Directorate General. The current Rp 1 billion [threshold] is too high and will not work optimally to extend the tax base," Yustinus said.

Yustinus also said the directorate general should take into account current economic situation to avoid panic from credit card users who might want to stop using their cards altogether.

"The government has to anticipate any negative effects from the regulation... [for example] it may trigger a downfall in credit card use, which may ultimately harm the national economy," Yustinus said.