Indonesia grants taxman new powers in emergency action

Added 17th May 2017

The president of Indonesia has signed emergency regulation giving the tax authority access to account information held by financial institutions months after $333bn in assets was disclosed under the country's hugely successful amnesty programme.

Indonesia grants taxman new powers in emergency action

The regulation was signed last week by Joko Widodo as part of Indonesia's pledge to join the global initiative of sharing financial information for tax purposes, reports Reuters.

During times of emergency, the Indonesian government can issue regulation in lieu of law and make it effective immediately.

However, parliament must debate and vote on the regulation in the next sitting period to pass it into law.

The government considered it “very urgent” to grant the tax office wider access to financial data.

Significant losses

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, reports regional newspaper The Straits Times.

It also calls on the tax office to share the information with authorities in other countries.

Failure to meet automatic exchange of information (AEOI) commitments from the Organisation for Economic Cooperation and Development (OECD) could lead to significant losses and disrupt the stability of south-east Asia’s largest economy, the government said.

The tax office previously had to file a request to the Financial Services Authority (OJK) to get access to a taxpayer's accounts, and only if they were under investigation.

The process could take more than six months and, in some cases, allowed people to cover up possible evidence of tax avoidance, tax officers have said.

Disclosure amnesty

The new regulation follows a nine-month amnesty last year, which saw almost one million taxpayers declare IDR4,881trn (£284bn, $367bn, €333bn) of undisclosed assets.

The largest sums were held in Singapore, the British Virgin Islands, Hong Kong and the Cayman Islands, all of which are signatories to the AEOI, along with about 100 others.

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Kirsten Hastings

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Kirsten is a senior reporter for International Adviser, covering global news stories about the financial services industry. She joined Last Word Media in October 2015 after two years working as a reporter covering the staffing and recruitment industry. Kirsten has a Masters in Financial Journalism from the University of Stirling. 

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