Indonesia tax office given data access

• May 18, 2017

JAKARTA • Indonesian President Joko Widodo has signed a new regulation giving the tax authorities access to information on accounts held at financial institutions such as banks.

The regulation was signed last week as part of Indonesia’s pledge to join the Automatic Exchange of Information (AEOI) initiative led by the Organisation for Economic Cooperation and Development.

The government considered it “very urgent” for the tax office to get wider access to financial data, the regulation said. Failure to meet AEOI commitments could lead to significant losses and disrupt stability in Indonesia, it said.

The President can issue a government regulation in times of emergency. It becomes effective immediately, although Parliament must debate and vote on the regulation during its next sitting, which starts tomorrow, to turn it into law. 

If Parliament votes it down, the regulation is repealed.

The regulation calls on banks, insurance companies and other financial institutions to report client information – including cash balances and financial gains from assets – as required under international standards, and for the tax office to share the information with the authorities in other countries.

The tax office can also ask financial institutions to share information for tax collection purposes.

Previously, under laws protecting banks and other financial institutions, the tax office had to file a request to the Financial Services Authority to get access to a taxpayer’s accounts, and only for the purpose of an investigation.

This could take more than six months and may allow people to cover up possible evidence of tax avoidance, tax officers have said.

The new regulation follows an amnesty campaign encouraging taxpayers to declare hidden wealth. Almost 1 million taxpayers joined the programme, declaring 4,881 trillion rupiah (S$511 billion) of previously concealed assets.

“We were not ready before the tax amnesty. But now that we’ve had the amnesty, we are,” said Bank Central Asia chief economist David Sumual.

Source: http://www.straitstimes.com/business/economy/indonesia-tax-office-given-data-access