Palace : Not All Money in Panama Papers is the Proceeds of Crime

The palace has said that not all money belonging to Indonesian citizens named in the Panama Papers comes from money laundering or the proceeds of crime. This means that not all the Indonesians named in the papers are culpable.

The presidential chief of staff Teten Masduki said that the money could be the proceeds from exports. Tetan said this was not a crime. “If I’m not mistaken, only 12 percent (of the proceeds) is converted to the rupiah, while the remaining is deposited abroad. Because we have free foreign exchange traffic, that’s a possibility,” he said in his office, Friday (22/4).

Nevertheless, the government will examine the data in the Panama Papers to check whether the funds have been reported to the tax office. If not, the taxpayers will be liable to sanction in the form of a tax penalty. (Read Infographics: The Panama Papers in Econographics)

To address this, the government has prepared a tax amnesty bill, which it hopes will encourage Indonesians to repatirate funds held overseas. Teten also hoped that the Indonesian taxpayers named in the Panama Papers would take advantage of the tax amnesty mechanism, as a common solution.

The government will also approach tax havens to come to agreements on tax matters, including getting access to confidential and other information from banks. (Read: Businesses Expect Tax Amnesty to Increase Tax Revenue by IDR 200 Trillion)

On the direction of President Joko Widodo, the presidential chief of staff held a coordinating meeting to discuss the follow up to the Panama Papers. The meeting was attended by the director general of tax, police chief, attorney general, the Financial Transaction Reports and Analysis Centre (PPATK) chief, Bank Indonesia (BI), and the Financial Services Authority (FSA). 

(Read: Palace Discusses Panama Papers with Law Enforcement Agencies)

According to Teten, the finance ministry confirmed that 80 percent of the names and accounts mentioned in the Panama Papers matched the data of the Directorate General of Tax. In fact, he claimed that the directorate has even more detailed information than the Panama Papers. “The Directorate General of Tax made it clear during the meeting that the Panama Papers only named names, not the amount of money [invovled],” he said.

The coordinating meeting will form a joint team comprising several ministries and institutions to deal with and follow up on the Panama Papers. According to Teten, the Directorate General of Tax will chair the team. Another meeting will be held to continue the discussions with President Widodo next week. (Read: Government Considers Forming Cross-Sectoral Team on Panama Papers)