Jakarta. Negotiations between Indonesia and the United States to exchange financial information are going smoothly and should be complete this year, an official told the Jakarta Globe on Friday (13/11).
The agreement will let the Directorate General of Taxation access data on US bank accounts owned by Indonesian citizens.
"The US is currently examining the document in the Indonesian language ... ensuring it fits what we have previously agreed on," said Hestu Yoga Saksama, spokesman at the directorate.
The agreement is based on the Foreign Account Tax Compliance Act, or Fatca, which since 2010 allows the US to monitor overseas financial activities of its citizens in more than 80 countries.
Yustinus Prastowo, executive director of the Center for Indonesia Taxation Analysis, said the agreement will certainly help the Indonesian government broaden its taxpayer database, but is far less comprehensive than Automatic Exchange of Financial Account Information (AEOI), which the Organization for Economic Co-operation and Development (OECD) introduced in 2014 to prevent tax evasion and increase transparency globally.
As of June, 102 countries agreed to adopt OECD's global tax reporting standards. Indonesia will begin to automatically exchange account information in September.
The US does not follow the global scheme as it already has Fatca.
"The US has a very friendly policy on entering money, capital inflows … so these people are not pursued. I'm not sure [the agreement] will be tight enough on foreigners. Fatca only provides account balance, while AEOI is more complete as it presents not only account, but also [data on] investment, insurance and transactions in the capital market," Yustinus told the Jakarta Globe.
However, according to Hestu, Indonesia will obtain all necessary information — personal identification data, account balance and annual income.
Indonesia has been trying to find more ways to improve tax compliance, including through the government's flagship tax amnesty program introduced in 2016.
Since 2009, the government has been unsuccessful in meeting its tax revenue target, with the worst shortfall in 2015, when only 81.5 percent of it was achieved.
The Directorate General of Taxation expects to miss the target again this year.