Tax Amnesty Law

After the government and the House of Representatives have agreed on the tax amnesty bill, the challenge is now about achieving the target set by the upcoming law.

The main target of the law is for the state to collect tax revenues of Rp 165 trillion from the ransom gotten from the tax amnesty.

The government also aims to repatriate funds belonging to Indonesians who have parked or invested them abroad and bring them into the national financial system. The amount of repatriated funds is expected to reach Rp 1 quadrillion. The basis for this calculation is that the estimate of net assets to be declared is Rp 3.5 quadrillion to Rp 4 quadrillion.

This law is considered important by the government. The revenues received from the tax amnesty fines will be used to make up the state deficit.

In the revised 2016 state budget, the state revenues and grants have decreased Rp 36.2 trillion from the budget's target to Rp 1,786.2 trillion. From the spending side, the 2016 revised state budget also decreased Rp 128 trillion to Rp 2,082.9 trillion, so the budget deficit is 2.35 percent.

The granting of tax amnesty is important for now and the future in building a state financial institution. Therefore, the effectiveness of this law becomes important. The big revenue target means that the use and monitoring of this program must be measurable and there must also be an anticipative measure in the case of the target not being reached.

We hope that the tax amnesty fine funds and the repatriated funds will be used for productive activities that really move the national economy.

This law will be in effect on July 1 and will be followed by a drafting of the rules of implementation and dissemination. Some have said that it is likely the target will not be reached. The pessimists say that the government will only manage to get around Rp 50 trillion, which is less than a third of its target.

Because of this the rules to implement the tax amnesty and repatriation program must have a clear mechanism and offer certainty.

It is also hoped the government has prepared investment models for the funds after they are repatriated into the national financial system - ones that are more interesting than those offered by other countries. The government promised that the secrecy of the taxpayers' data cannot be used for other things other than for tax purposes. This promise must be well communicated and kept.

There is no easy way to become an advanced economy. This program is a test for the government and we hope the program runs well. If we manage to get through it, as a nation we will grow stronger.

Source Kompas, Thursday, June 30, 2016