JAKARTA, KOMPAS — Singapore has become a favorite place for Indonesians to save or invest their assets abroad. Previously known only as general assumption, the status has now been confirmed empirically through the tax amnesty.
Based on data from the Directorate General of Taxation (DGT), the declaration of assets during the tax amnesty up until March 29, 2017 reached Rp 4.67 quadrillion. Nearly 75 percent of the total came from the declaration of assets in the country, with the rest from the declaration of assets abroad and repatriation.
The declaration of assets abroad totaled Rp 1.03 quadrillion, while repatriation of assets reached Rp 146 trillion. The majority of declared assets abroad and repatriated funds came from Singapore.
Of the total declared assets abroad, Rp 751 trillion, or 73 percent located in Singapore, more than tripled the combined assets declared in the Virgin Islands, Hong Kong, Cayman Islands and Australia.
Of the total repatriated assets, Rp 85 trillion, or 56 percent also came from Singapore, almost double the repatriated assets from the Cayman Islands, Hong Kong, Virgin Islands and China.
The director of counseling, services and public affairs at the DGT, Yoga Hestu Saksama, said Thursday that about 60 percent of the declared assets abroad were in the form of cash and cash equivalents such as stocks and mutual funds. The remaining 40 percent were fixed assets such as property.
Yoga estimated there was still a large amount of assets abroad including in Singapore that had not been declared during the tax amnesty. Nevertheless, he was optimistic that the DGT could track the funds and impose income tax on assets kept abroad with the implementation of the Automatic Exchange of Information (AEOI) in 2018.
After the tax amnesty was completed, Yoga said, the DGT would oversee taxpayers who participated in the tax amnesty, both in declaration and repatriation of assets. The 2016 tax returns, for example, must be in accordance with the statement of assets in the tax amnesty.
For those who have not taken part in the tax pardon, the DGT will be able to monitor their assets abroad through the AEOI. Singapore and Indonesia are among countries committed to implementing the AEOI scheme.
"So, in the future, the two countries will be transparent as long as it meets the requirement. There is no problem with placing assets or investing abroad. Most importantly, the obligation to pay taxes to the Indonesian government must be fulfilled," Yoga added.
According to a study by McKinsey management consulting firm, the assets of Indonesian citizens placed abroad totaled around Rp 3.25 quadrillion.
The head of the Center for Economic Studies and Public Policy at Gadjah Mada University, Yogyakarta, A. Tony Prasetiantono, said Singapore had became a favorite place for the Indonesian citizens to park their assets due to two main factors, namely the pull factors of Singapore and the driving factors of the condition in Indonesia.
The pull factors of Singapore, according to Tony, included the local government’s attempt to lure foreign funds with low tax rates. The tax rates can be lowered because the needs of funds for development are much lower than those in neighboring countries.
Unlike Singapore, Indonesia has vast territory and needs a larger amount of funds. Consequently, its tax rate will be unable to compete with those in Singapore. For owners of the funds, Tony continued, investing money in Singapore gives higher returns because the tax rate is lower.
"The finance minister can take a personal approach with the people who still keep a lot of money in Singapore. I believe the government has enough valid data about their identities," Tony said.
The executive director of the Indonesian Center for Taxation Analyses, Yustinus Prastowo, said Singapore was a favorite place to save or invest assets overseas because of various incentives and facilities offered by the local government.
Singapore, for example, offered integrated services from banks, including bank secrecy, low tax rates, ease of doing business. Geographically, Singapore is quite strategic for business and mobility for Indonesians. In addition, Singapore offers many competent professionals and more importantly, legal certainty.
Technical issues
The deputy chairman of the Indonesian Chamber of Commerce and Industry (Kadin) for Industry, Johnny Darmawan, said the number of the participants of the tax amnesty chose only to declare their assets rather than to repatriate them, partly because of technical problems. It is not easy, for example, to move assets in the form of cash equivalents such mutual funds and stocks.
Meanwhile, the chairman of the Indonesian Hotel and Restaurant Association (IHRA) Hariyadi Sukamdani said the association had reminded its members since February to take advantage of the final stage of the tax amnesty, which would end on March 31.
"Obviously businesses, especially small and medium enterprises, will take advantage of the last day of the tax amnesty," said Hariyadi, who is also the chairman of the Association of the Indonesian Employers (Apindo). He believed loyal taxpayers, both individuals and companies, were certainly aware of the benefits of the tax amnesty.
The secretary-general of Apindo, Sanny Iskandar, said, during the last two weeks, Apindo had actively reminded its members of the deadline.
"Moreover, the Directorate General of Taxation has given a signal, a kind of warning, that he would monitor those who should, but don’t take part in the tax amnesty," Sanny said in Jakarta.
Sanny asked the employers to understand the meaning of the slogan "Reveal, redeem, relieved" echoed under the government\'s tax amnesty. Moreover, through the transparency efforts of the government, companies or individuals who need to join the tax amnesty should have been recorded.
(DIM/DKA/CAS/MER/LAS)
