JAKARTA, Nov 11 (Reuters) - Indonesia will not require taxpayers to repatriate wealth back home as part of a tax amnesty initiative expected to be implemented by the end of this year, a senior cabinet minister said on Wednesday.
The comments by Coordinating Minister for Political, Legal, and Security Affairs Luhut Panjaitan come after private bankers in Singapore, where the Indonesian tax office estimates around 3,000 trillion rupiah ($220.83 billion) of Indonesian assets are parked, said their clients were worried about the amnesty plan.
“This one is not only about collecting money from outside, but the very important one is to strengthen our database on tax so by next year we can see much more tax revenue,” Panjaitan told reporters.
Taxpayers disclosing their wealth in the first three months of the amnesty will be taxed at 2 percent, Panjaitan said, adding that the rate would rise to 4 percent in the following three months and go up to 6 percent at the end of 2016, when the amnesty programme finishes.
That compares to the current tax rate for individual income at 5-30 percent, and for company profits at 20-25 percent. Panjaitan said those set rates would be lowered after the tax amnesty period ends.
The government of Southeast Asia’s largest economy introduced the amnesty in a bid to counter dwindling revenues amid an economic slowdown and a sharp decline in demand for Indonesia’s main resources, such as palm oil and coal.
The tax office expects the tax amnesty plan to help add 60 trillion rupiah to next year’s tax collection. The state budget is expected to run a fiscal deficit near the maximum limit permitted by law due to a large tax shortfall this year.
The amnesty plan is subject to parliament approval. ($1 = 13,585.0000 rupiah) (Writing by Gayatri Suroyo; Editing by Miral Fahmy)