Businesses Demand Certainty as Final Decision on Tax Amnesty Looms

Days remain until the final deliberation of the tax amnesty bill at the House of Representatives (DPR). The government expects the House to wrap up discussion of the tax amnesty bill this week, before the plenary session to discuss the draft revision of the 2016 state budget. Meanwhile, entrepreneurs hope the new tax amnesty bill will accommodate their needs

Chair of the Advisory Council of the Indonesian Employers Association (Apindo) Sofyan Wanandi said that entrepreneurs are more likely to participate in tax amnesty policies that offer low tariffs. “That means they will be more interested in taking advantage of this tax incentive this year,” said Sofyan at the CEO Gathering held at the Apindo office in Jakarta, Wednesday (17/6). (Read: Government Certain Tax Amnesty Policy Will be Finalised Next Week).

Lawmakers have discussed extending the duration of the tax amnesty. The tax amnesty bill states the policy will be in effect until the end of 2016. However, the government wishes to extend the period to March or April 2017, with a higher redemption for those participating in the latter months.

As well as lower redemption rates, entrepreneurs also want legal certainty, confirmation of the instruments for repatriating assets, and legal assurance of data confidentiality. They also expect a guarantee that the assets they repatriate to the country can be used as collateral to obtain loans, to be used for investment.

“If the funds are on hold, how can they be used to obtain loans to promote economic growth,” said Sofyan. (Read: Tax Amnesty Bill, Only Needs Discussions Over Time Period and Redemption Fees).

In response to these requests, Finance Minister Bambang Brodjonegoro said these issues would be addressed in the implementing provisions after the bill is passed. “We will develop the technical regulations. Plus some other rules. We’ll get that done quickly,” said Bambang. (Read: Government, House Still Deliberating Over Tax Amnesty Tariff, Time Period).

Meanwhile, the Financial Services Authority (OJK) is still discussing the request for a guarantee that assets can be used as collateral to obtain loans. This review of this request will take some time, to avoid the risks that arose during the Asian financial crisis in 1998, when private foreign debts were so high they could not be settled when the crisis occurred.

Therefore, the OJK will limit the framework by issuing a policy to avoid inflated debt. However, Bambang confirmed that the Financial System Safety Net and Basel 3 regulation for banks would allow the implementation of this collateral policy.

At the meeting, Bambang also explained that the instruments open to repatriated funds would include bank time deposits, fixed income funds, stocks, and special bonds.