Indonesia considers to set up trust fund for repatriation assets

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JAKARTA (TheInsiderStories) – Senior Economic Minister Darmin Nasution saying, Indonesia government considering to set up trust fund to manage the repatriation assets from the implementation of tax amnesty law. He added, there was concern that if the funding is not keeping with the good will could create bubble in the domestic economy.

Previously Finance Minister Bambang Brodjonegoro stated the government also exploring to create offshore finance centre and allows local companies to set up special purpose vehicle in the country.

“If there is incoming money from the tax amnesty just released in the financial sector the economy could bubbles here and there. Therefore, it should be prepared, not just offshore, we thought about how to develop trust fund,” Darmin stated.
In addition, Chair of Financial Service Agency (OJK) Nurhaida said that the agency is preparing a policy related to the repatriation of funds tax amnesty, especially in the utilization of tax amnesty funds in the capital market that is expected to encourage the positive sentiment in the equity markets.
The policy including setting up investment instruments, namely Fund management contract by relaxing the regulation of a decrease in the value of the investment for each investor of Rp10 billion to 5 billion. Mutual Fund Limited with a relaxation of regulations such as the removal of their liabilities of the target company at the time of recording the fund.
Nurhaida confirms that the FSA will work closely with the Directorate General of Tax to obtain a list of Taxpayer were repatriated by tax amnesty, as well as coordinate with PT. Kustodian Sentral Efek Indonesia and Bank Indonesia under the supervision of fund repatriation, especially during the holding period.

On Monday, Commission XI of Indonesia parliament has agreed to bring the tax amnesty bill to plenary meeting after disuss in a month since May 23. The bill will get an approval from plenary meeting of House of Representative on Tuesday before start to implement starting July 1 to March 31, 2017.

The bill is designed to make it attractive for tax evaders to come clean, declare and repatriate their funds into Indonesia.

“We’ve already discussed on the draft tax amnesty since May 23 to June 24. Based on the fractions decision we give our approval on the bill and ready to send to plenary meeting tomorrow,” Achmadi Noor Supit said at hearing with Finance Minister Bambang Brodjonegoro and Law Minister Yasonna Laoly.

Chairman of Tax Amnesty Committee Bill of the House Supriyatno stressed, the redeem tariff for repatriation rate set at about 2 percent in the first period, 4 percent for the next quarter and 6 percent in the last quarter on March 2017.

While, for the declared rate is ranging from 4 for the first quarter, 6 percent for the second quarter and 10 percent in the first quarter of 2017.

He added, for the small and medium enterprises, the redeem tariff is set 0.5 percent for the company who has total assets Rp4.8 billion to Rp 10 billion and over than Rp10 billion set about 2 percent.

“The company could redeem the revenues tax, value-added tax and value-added of luxury tax that unreported yet,” Supriyatno said.

He elaborate more, the repatriation asset is hold for three years including real sector, direct investments, marketable securities, bank deposits, government bonds and other assets.

Bambang applaused the Commission XI decision and expect the plenary meeting will give approval on the bill.  He state it had discussed with the Governor of Bank Indonesia and Chairman of Financial Services Agency on how to implement the law. In addition, he stated that the readiness of banks is one of the key success factors of tax amnesty policy.

The government assumption could bring back repatriation assets Rp 1,000 trillion and Rp 4,000 trillion declared tax. From there, the state expect to raises revenue tax above Rp100 trillion.

To keep the fund stay in Indonesia, government is exploring to set up an offshore financial center after the tax amnesty is implemented in the country. Bambang said the government, is still exploring the final concept of the offshore financial center for Indonesia.

“It is like a tax haven area that can accommodate Indonesian companies that have business abroad with lower tax,” He stated.

Currently, Indonesia’s tax-to-GDP ratio is very low at around 11 percent. Indonesia has a population of over 255 million people and there are only 27 million registered tax payers and only 10 million actually fulfill their tax obligations.

DETAIL OF REDEEM TAX TARIFF:

Repatriation rate:

  1. 2% for the first three months
  2. 3% for the second of three months
  3. 4% for the third of three months

Declared rate:

  1. 4% for first 3 months
  2. 6% for the second of three months
  3. 10% for the third of three months

The post Indonesia considers to set up trust fund for repatriation assets appeared first on The Insider Stories.

Source: The Insiderstories
Indonesia considers to set up trust fund for repatriation assets

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