balinews

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Feb 14, 2010
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Taxpayers in Indonesia waited until the last minute - as taxpayers everywhere often do. But enough of them responded to a new tax amnesty over the last few days to help make it a relative success as the first phase of the scheme came to a close yesterday.

As of 8pm in Jakarta, Indonesians declared a total of 3,516 trillion rupiah (S$368 billion) worth of assets, both at home and overseas.

This means the initiative has already achieved almost 90 per cent of its 4 quadrillion rupiah target in the first three months of the nine-month-long scheme, which officially kicked off only in mid-July.


Indonesia's tax amnesty 'exceeds expectations', Asia News & Top Stories - The Straits Times
 

davita

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Mar 13, 2012
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The objective of the amnesty scheme was to motivate wealthy Indonesians to repatriate their OFFSHORE funds (ill-gotten or legally acquired) back to RI and invested here so the President's budget for infrastructure development could be funded. The tax recouped was not the aim....that is negligible to the grand amnesty scheme.
Given below info from the same source as above I'd say that objective failed.....and Sri Mulyani (Finance Minister) has had to amend next year's budget.

"The only blemish was that just 135 trillion rupiah was repatriated from overseas. This was 14 per cent of the 937 trillion rupiah declared by taxpayers with assets abroad."

Meanwhile, millions of Indonesians have rushed to take advantage of the scheme and declare their assets within and out of Indonesia....but just declaring may not have any real effect on the tax revenue stream. Those assets aren't generally taxed, only income generated from those assets provide the tax revenue. This may be useful down the road as more Indonesians will now be exposed to their annual tax account.... but the immediate revenue falls short.

It's a good start and has woken most Indonesians to their responsibility. If they want services they have to pay.
 

spicyayam

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Jan 12, 2009
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In my mind the program has been a success at both getting much needed income for the government and making Indonesians more aware of their duty to pay tax.

Also it will have an affect on Indonesian who becomes a nominee for a foreigner to buy property here. Since the purchase price of a property is considered income by the government, it could be a huge deterrent from foreigners using nominees in the future.
 

mugwump

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Mar 15, 2011
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seattle pekutatan
In my mind the program has been a success at both getting much needed income for the government and making Indonesians more aware of their duty to pay tax.

Also it will have an affect on Indonesian who becomes a nominee for a foreigner to buy property here. Since the purchase price of a property is considered income by the government, it could be a huge deterrent from foreigners using nominees in the future.
Can't help but think that news article was a bit of wishful thinking. Have it from reliable good sources that the 2% amnesty has been extended thru Dec. 2016. Nothing in the news about it, and if true why was it extended? Obviously the only motive would be more carrots because not enough money has been coming into the coffers.
Supposedly the lady in charge of this program of taxing assets is highly regarded with fine credentials from previous employment with the World Bank. If so, although expats are only an incremental portion of the population here; why plug up the hole created for people that CANNOT own property in Indonesia? They (meaning foreigners living here) don't own anything tangible so they can't be taxed for tangible assets!
 

spicyayam

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Jan 12, 2009
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My wife was at the tax office for most of last week helping foreigners who left it to the last minute. She said it was a mad rush.

If you do take the amnesty rate of 2%, I believe the ongoing reporting requirements are very strict.

If so, although expats are only an incremental portion of the population here; why plug up the hole created for people that CANNOT own property in Indonesia?

I don't think foreigners are any more or less being targeted in this campaign. But for sure at least where I live expensive villas with pools are being checked up on.

They (meaning foreigners living here) don't own anything tangible so they can't be taxed for tangible assets!

It's not the assets themselves that are being taxed, but the supposedly non-payment of tax on income earned to buy those assets.
 

davita

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Mar 13, 2012
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Can't help but think that news article was a bit of wishful thinking. Have it from reliable good sources that the 2% amnesty has been extended thru Dec. 2016. Nothing in the news about it, and if true why was it extended? Obviously the only motive would be more carrots because not enough money has been coming into the coffers.
Supposedly the lady in charge of this program of taxing assets is highly regarded with fine credentials from previous employment with the World Bank. If so, although expats are only an incremental portion of the population here; why plug up the hole created for people that CANNOT own property in Indonesia? They (meaning foreigners living here) don't own anything tangible so they can't be taxed for tangible assets!

There is a lot of confusion over this amnesty.
1. The assets aren't being taxed...it is income from those assets that people have not previously declared that the amnesty covers. Rather than going backwards to find how much tax should have been paid the amnesty allows a % of declared value to be recovered....and all previous tax implications are then voided under the amnesty.
It's the same with cash in foreign banks which would have earned interest but not declared to Indonesian Revenue. If repatriated and invested for 3 years a penalty of the value is applied. If not repatriated a higher penalty is charged and, in future, the interest will have to be declared and taxed in RI if the asset owner is liable.

2. The 2%/4% phase is over (30 Sep) and the money declared or repatriated and invested. The extension to December only grants for the paperwork to be cleared.

3. The issue of nominee is that the asset (the property) should have been declared...this is not new.....but many people (including nominees) don't pay taxes so this might expose those. The tax collector may ask "how can you own this property and never paid taxes...where did the money come from?"
 

Mark

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Apr 19, 2004
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In my mind the program has been a success at both getting much needed income for the government and making Indonesians more aware of their duty to pay tax.

Also it will have an affect on Indonesian who becomes a nominee for a foreigner to buy property here. Since the purchase price of a property is considered income by the government, it could be a huge deterrent from foreigners using nominees in the future.

Totally agree spicy. One of the perhaps unintended consequences of the program was to make ordinary Indonesians and tax residents (i.e., expats) more aware of their tax obligations. Indonesia has an incredibly low tax collection rate as a % of GDP, and increasing awareness, and eventual (inevitable) enforcement of the tax laws, will certainly improve the country's finances.

Also, all expats living in Indonesia more than 183 days in a twelve month period should take note that they are liable for Indonesian taxes on worldwide income and with global information sharing kicking in a couple years from now, there are very few ways to hide. Best to get an NPWP number and start filing returns accordingly. Penalties won't be fun and non-compliance is another way to put your family jewels in the safekeeping of strong and unsympathetic hands.
 

davita

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Mar 13, 2012
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IMO if Indonesia wishes to tax expats it is more likely to tax those non-resident foreigners who have nominee or Hak Pakai title on villas in Bali and rent them out, with or without a Pondok Wisata, and not declaring the income. That doesn't mean the Tax office would get much revenue but Hotel and Resort Owners are pushing to have those rental units out of competition.
Some officials recently came around where I live to check on IMB's and resident's status.

All expats with work-permits in Indonesia have to comply with declaring tax on income as do foreign owned Companies operating in RI. In 2016 this has been recorded at only 44,000 expat IMTA's issued....How Many Expats Live in Indonesia?

The amount of RI tax 'possibly' recoverable from resident retired, or non-working, expats from their 'overseas' pensions or investments is less than a drop in the bucket.
IMO it doesn't seem worth the effort to crack down in this area, for no real result, as it would also be counter-productive to the stated President's aim to increase Foreign Investment and currency exchange.
 
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