Many countries have discussed implementing an ever-allusive wealth tax, but Indonesia is seeking to tax more high income individuals to bolster its economy.
The Indonesian finance ministry presented the proposals – which could be part of key reforms this year – to a parliamentary commission, Bloomberg has reported.
This comes a day after International Adviser published a story on how now is the best time for a wealth tax.
The Indonesian government needs to collect more revenue to sustain spending while keeping its vow to bring its budget deficit back within the legal limit of 3% of GDP, from 6% last year.
“The goal of this tax reform is not just revenue collection but the sustainability of the state budget,” said finance minister Sri Mulyani Indrawati. “The whole world is also accelerating its revenue collection in the midst of soaring budget deficits and debt ratios.
“This is a response that must be done with caution.”
Proposals
Reports state Indonesia could add a 35% income tax bracket for individuals earning more than 5bn rupiah (£246,704, $348,844, €284,727) a year.
Taxpayers are currently grouped into four brackets, with rates ranging from 5% to 30%.
According to Knight Frank, the country is poised to see the world’s fastest growth in ultra-high net worth individuals in the next five years.
Also, Bloomberg reported that Indonesia could take another stab at a tax amnesty programme, following a 2016 programme that uncovered 4.813trn rupiah in undeclared assets.
Taxpayers who have undisclosed assets as at the 2019 tax year might be able to settle their past obligations at current income tax rates without any sanctions. They might enjoy lower rates if the assets are invested in government securities.
However, those who failed to disclose their assets during the first tax amnesty period in 2016 will have to pay income tax above the highest tax amnesty rate.
