The government has proposed a revision of the tax amnesty tariff. However, the Finance Commission (Commission XI) of the House of Representatives (DPR) has not agreed on a figure for the tax amnesty tariff to be included in the draft tax amnesty bill because many lawmakers believe that the tariff contained the bill is too low.
Deputy Chairman of Commission XI Supriyatno said he had received the government’s new proposal for the tax amnesty tariff. “We’ll be discussing it at a later date because we’ve not got to that yet,” he told Katadata on Thursday (26/5). He was, however, unwilling to reveal the new figure or tariff scheme proposed by the government.
Supriyatno said that deliberation of the tax amnesty bill, which began on Monday (23/5), has reached the stage of involving stakeholders in the government, such as the Ministry of Finance and Bank Indonesia (BI). There were three main topics of discussion: the definition of tax amnesty, benchmarking the policy with other countries, and data clustering.
The latter is divided into five sub-topics: scope of the tax amnesty, tax subjects, and objects, the tax amnesty tariff, the procedure for applying for tax amnesty, consequences and sanctions, and treatment of repatriated assets.
(Read: Unlike BI, Government Aims to Collect IDR 165 Trillion from Tax Amnesty)
Supriyatno said that to date, Commission XI has only discussed the scope, and subjects and objects of the tax amnesty policy. Discussion of the tax amnesty tariff will start on Monday.
He added that internal parliamentary discussions about the tariff went sour because of a clash of opinions between the factions.Each of the factions is now coordinating internally to present a united front. “Each faction is different. So each faction is coordinating (to decide on) a competitive tariff for inclusion in the bill,”said Supriyatno.
He added that lawmakers do not want to rush the deliberation of the tax amnesty bill even though the government wants the bill passed as a matter of urgency in order to raise additional revenue this year. However, he claimed that the House was attempting to complete the deliberation of the bill by July, because the government plans to apply the tax amnesty for just six months,up until the end of this year.
(Read: BI Urges SOEs to Issue Bonds to Accommodate Repatriated Funds )
According to a copy of the tax amnesty bill obtained by Katadata, the government proposed tax amnesty tariffs of 1 percent, 2 percent and 3 percent of reported net assets if the taxpayer is willing to repatriate its assets; and tariffs of 2 percent, 4 percent and 6 percent for taxpayers who simply declare their overseas assets.
However, many believe these tariffs are too low. Executive Director at the Center for Indonesia Taxation Analysis (CITA) Yustinus Prastowo has said that the tariffs are too low, citing the tariffs of between 5 percent and 10 percent applied in other countries that have had tax amnesties.
Yustinus said that if the tariff is too low, the state would lose out from this policy because if repatriated funds are placed in government bonds (SUN) because taxpayers would gain a yield of around 8-9 percent from the bonds. As a result, the government would lose out because there would be a differential of some three to eight percent payable by the government in debt interest.
Meanwhile, as the deliberation of the bill enters the consultation phase, the government has replaced the Head of the Tax Amnesty Working Committee, Director General of Taxation Ken Dwijugiasteadi, with the Secretary General of the Ministry of Finance, Hadiyanto. Supriyanto said this was nothing out of the ordinary and aimed to strengthen the discussion and bridge the aspirations of other institutions in government.
(Read: Three Banks to Manage Repatriated Tax Amnesty Funds)
Separately, Minister of Finance Bambang Brodjonegoro said the head of the working committee had been replaced because there were many legal issues that needed to be reviewed during the discussions. “So it had to be someone who understands the law as well,” he said after attending a DPR Plenary Session on parliament’s response to the proposed macro assumptions for the 2017 state budget at the MPR/ DPR Building.
Previously, Bambang said that taxpayers who applied for tax amnesty would declare overseas assets of an estimated IDR 3,500 trillion – IDR 4,000 trillion. “My estimate of IDR 4,000 trillion (of assets declared) is a conservative figure; it actually could be IDR 11,000 trillion,” he said. Assuming an average tariff of 4 percent, the state could reap up to IDR 160 trillion in revenue.
Meanwhile, a potential IDR 1,000 trillion could be declared and repatriated. Assuming a tariff of 2 percent, this could generate state revenue of IDR 20 trillion.
So the tax amnesty policy is expected to generate state revenue of up to IDR 180 trillion. However, Bambang plans to set a revenue target of IDR 165 trillion in the amended 2016 state budget.