Indonesia’s parliament enacted a bill on October 7, 2021, for one of the country’s most significant tax reforms, which includes hiking VAT next year and introducing another Tax Amnesty Program. The bill intends to increase revenue collection and tax compliance to recuperate from the impact COVID-19 has on state finances this year and in 2020.
These new tax reforms hold promise to raise tax income by roughly 139.3 trillion rupiahs ($9.80 billion) in the coming fiscal year, bringing the tax ratio of Southeast Asia’s largest economy to 9.22% of GDP, up from 8.44% before the law.
This article will form a guide for investors about the Tax Amnesty Program, 2022 in Indonesia.
Understanding Indonesia Tax Amnesty Program
The Indonesian government believes that about IDR 4,000 trillion ($303 billion) of “Indonesian money” is stashed away in tax harbors including Singapore, Panama, London, Hong Kong, and the British Virgin Islands. This means the government is missing out on much-needed tax capital, which, if held in Indonesia’s banking system, will contribute greatly to the country’s economic progress.
Indonesia seeks to make it advantageous for (former) tax evaders to report their overseas riches to the country’s tax authorities and – if wanted – repatriate these capitals into the country by granting tax benefits and exemption from prosecution (although a modest penalty must be paid).
The government wants to repatriate IDR 1,000 trillion (about USD $76 billion) in capitals that are currently stashed overseas. Tax declarations from onshore and offshore money should result in an extra IDR 165 trillion (about USD $12.5 billion) in state revenue.
2022 Indonesia Tax Amnesty Program
Indonesia’s Tax Amnesty program will run for 6 months and have two policies. Individuals can disclose their current net assets to the government by paying a certain amount of special tax. The following are the two-fold policies of this program:
||Taxpayers who haven’t disclosed their current assets in the previous Tax Amnesty Program||
||Taxpayers who haven’t reported any assets collected between 2016 and 2020 that were unreported in the 2020’ Annual Notification Letter.||
How Cekindo Can Help
Cekindo, as an accounting firm, offers a comprehensive range of tax consulting services to assist your company in complying with the latest tax system in Indonesia. You may save your operational costs and administrative load while increasing your company’s flexibility and development by outsourcing your accounting and tax reporting duties to us.