World Economy

Indonesia Launches 9-Month Tax Amnesty

Indonesia Launches 9-Month Tax AmnestyIndonesia Launches 9-Month Tax Amnesty

Indonesia has introduced a tax amnesty as the government hopes to lure back capital parked abroad by wealthy citizens.

But the measure has faced criticism from people unwilling to let evaders off the hook, Reuters reported.

The Indonesian government said Tuesday it believed the nine-month tax amnesty could bring in 165 trillion rupiah ($12.4 billion) by offering low rates to those coming forward to declare untaxed money.

Many wealthy Indonesians have long chosen to stash billions of dollars abroad, particularly in neighboring Singapore, to avoid tax payments.

Parliament approved the amnesty after months of wrangling, with all but one of the 10 parties in the legislature backing the measure.

People willing to declare their untaxed wealth would be offered a rate of between 2% and 10%, far below the 30% top income tax rate for individuals, Jakarta said.

Finance Minister Bambang Brodjonegoro said he hoped some capital currently parked abroad would “now enter Indonesia’s financial system and boost economic growth.”

President Joko Widodo looks desperate for extra money to fund infrastructure projects as investment falls due to a slowing global economy.

But the bill has faced criticism from the public, with people arguing the legislation means that tax evaders will go unpunished, and that it is unfair to those who have honestly paid their taxes.

Current personal income tax rates in Indonesia range from 5% to as high as 30%, while businesses are taxed at a rate of up to 25%.

Only 27 million of Indonesia’s 250 million population are registered taxpayers and only around a million people file tax reports.