Repatriation Increases Liquidity - Tax Amnesty Law has Positive Impact on Banks

Law No. 11/2016 regarding tax amnesty carries a positive impact for banks because the repatriation of funds, as mandated in the legislation, will increase liquidity. The repatriation will also come at the right time as the loan to deposit ratio (LDR) in the Indonesian banking sector currently stands at 89.5 percent.

The additional liquidity from the repatriation of funds kept overseas by Indonesian citizens will loosen the LDR. PT Permata Bank economist Josua Pardede told Kompas on Monday (11/7) that potential repatriated funds could reach Rp 560 trillion (US$42.6 billion).

The repatriation will increase the lenders' third party funds (DPK), which in April stood at Rp 4,478 trillion. "With the third party fund increase, the lenders' intermediation function will improve as the loan to deposit ratio will decrease to around 86-88 percent by the end of this year," he said.

With improving liquidity, full year credit growth could hit 12-14 percent by the end of 2016.

Josua added that the banking sector's intermediation function would improve, thus it would be able to support finance in the real sector, which is expected to improve in the second half of this year. Credit growth is estimated to reach 11-13 percent.

Josua is optimistic that the tax amnesty program will run well this year given the response from market players, particularly from the financial industry, which indicated that the tax amnesty would have the potential to boost state income and repatriated funds.

Those who are interested in participating in the tax amnesty program are attracted to the low rate of tax to be imposed. "I think Bank Indonesia's assumption of Rp 560 trillion [repatriated funds] is relevant considering the automatic exchange of information agreement that will become effective in 2018. The tax amnesty will be very good momentum," he said.

Therefore, Bank Indonesia and the banking sector need to prepare instruments to accommodate the repatriated funds. Bank Indonesia is preparing to issue short-term foreign currency convertible bonds and negotiable certificates of deposit (NCD).

A foreign exchange-denominated instrument could be an alternative so that the repatriated funds are not easily withdrawn from the banks. The government could also issue foreign exchange bonds to serve as a source of financing for productive posts, such as infrastructure development and investment.

Judicial review

Bahana Securities Head of Corporate Strategy and Research Harry Su said the tax amnesty program would continue despite some groups taking the Tax Amnesty Law to the Constitutional Court for a judicial review.

"I think the tax amnesty program will keep running. Indonesia is not the only country to run such a program," Harry said.

He said he hoped that the judicial review process at the Constitutional Court would not affect the tax amnesty program. The One Justice Foundation (YSK), Struggle for Indonesian Justice Federation (SPKRI) and four other civil groups filed a judicial review on Wednesday, July 13. YSK chairman Sugeng Teguh Santoso said his group would soon complete the documents for the judicial review process, in which it would submit 11 articles in the law for review based on 12 reasons. One reason was that the Tax Amnesty Law allowed for tax evaders. The law also did not include the principle of transparency, so it did not promote equality before the law, particularly regarding tax discipline.

Constitutional Court head Arief Hidayat said there was no timeframe or deadline for the judicial review of any law according to the court's internal rules. However, the Tax Amnesty Law review was seen as urgent.

House of Representatives Commission XI chairman Ahmadi Noor Supit of the Golkar Party faction said the request for a judicial review was a consequence of a particular law, which was considered as going against a higher legislation or sense of justice. However, the Tax Amnesty Law should be seen as a short- and long-term solution to improve the economy.

"When the House was discussing this law, we knew there were several problems. But after the government convinced us that the law would be mean a boost to state income, we agreed to give it a chance," Supit said.

A member of the House special committee discussing the Tax Amnesty Law, Ecky Awal Muharam of the Prosperous Justice Party faction, said a judicial review was the constitutional right of every citizen.

However, House Commission XI member, Heri Gunawan of the Gerindra Party faction, doubted the effectiveness of the judicial review of the Tax Amnesty Law given that the law would be effective until March 31, 2017 only. "It is fine for certain groups to ask for a judicial review. But this law will be effective for a short period of time. I don't think the time [for the judicial review process] will be sufficient," he said.

 

Source Kompas, Tuesday, July 12, 2016

UU Pengampunan Pajak

Setelah pemerintah dan DPR menyepakati Undang-Undang Pengampunan Pajak, tantangannya adalah mencapai target undang-undang itu.

Target utama undang-undang ini adalah negara mendapatkan penerimaan pajak dari uang tebusan program pengampunan pajak tahun ini sebesar Rp 165 triliun.

Pemerintah juga menargetkan repatriasi dana milik orang Indonesia yang selama ini disimpan atau diinvestasikan di luar negeri ke dalam sistem keuangan nasional. Besar uang yang direpatriasi diharapkan Rp 1.000 triliun. Dasar penghitungan adalah perkiraan deklarasi aset bersih mencapai Rp 3.500 triliun hingga Rp 4.000 triliun.

Undang-undang ini dianggap penting oleh pemerintah. Penerimaan dari uang tebusan pengampunan pajak akan digunakan untuk menambal defisit pendapatan negara.

Dalam Anggaran Pendapatan dan Belanja Negara Perubahan 2016 pendapatan negara dan hibah pada APBN-P 2016 berkurang Rp 36,2 triliun dari target APBN 2016 menjadi Rp 1.786,2 triliun. Pada sisi belanja, APBN-P 2016 juga berkurang Rp 12,8 triliun menjadi Rp 2.082,9 triliun sehingga defisit anggaran menjadi 2,35 persen.

Pemberian pengampunan pajak penting untuk saat ini dan ke depan dalam membangun kelembagaan keuangan negara. Karena itu, efektivitas undang-undang ini menjadi penting. Target besarnya uang tebusan yang masuk, penggunaan, dan pemantauan program ini harus terukur, termasuk juga mengantisipasi jika target tidak tercapai.

Kita berharap penggunaan dana tebusan program pengampunan pajak dan dana repatriasi yang kembali ke dalam negeri digunakan untuk kegiatan produktif yang benar-benar menggerakkan ekonomi nasional.

Undang-undang ini segera berlaku 1 Juli dan diikuti penyusunan aturan pelaksanaan serta sosialisasi. Sejumlah pihak menyatakan, kemungkinan pemenuhan target bisa jadi meleset. Yang pesimistis menyebut, besar penerimaan hanya akan sekitar Rp 50 triliun, kurang sepertiga dari target pemerintah.

Untuk itu, peraturan pelaksanaan program pengampunan dan repatriasi ini harus memiliki mekanisme jelas dan memberikan kepastian. Pemerintah diharapkan juga telah menyiapkan model-model investasi untuk dana yang kembali ke sistem keuangan nasional yang lebih menarik dibandingkan dengan tawaran negara lain.

Pemerintah menjanjikan, kerahasiaan data wajib pajak tidak dapat digunakan untuk kepentingan lain selain pajak. Hal ini harus tersosialisasikan dengan baik dan ditepati. Tidak ada jalan mudah untuk menjadi negara ekonomi maju. Program ini merupakan ujian bagi pemerintah dan kita berharap program berjalan baik. Jika berhasil melaluinya, sebagai bangsa kita akan tumbuh lebih kuat.

disadur dari Kompas, Kamis, 30 Juni 2016

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