Indonesia: Jokowi Seeks the House’s Approval for 2nd Tax Amnesty Program

  • President Joko “Jokowi” Widodo has notified the House of Representatives about his intent to introduce another tax amnesty program, the second in five years, as part of the government attempt to boost tax revenues amid the Covid-19 pandemic, a senior economic minister said on 19 May 21.
  • The Coordinating Minister for Economic Affairs Airlangga Hartarto said a stipulation about tax amnesty would be among items included in a bill for the 2009 Law about General Provisions and Tax Procedures revision.
  • “Items that would be revised include value-added tax, personal income tax, reduction of corporate income tax rates, value-added tax on a luxury item, excise, carbon tax. Then there are items related to a tax amnesty. We are looking forward to discussions with the House,” Airlangga told reporters.
  • The minister said Jokowi has sent a formal request to the House for starting the bill deliberation immediately.
  • Indonesia’s 1Q21 tax collection was down 5.6% y/y and amounted to less than 19% of the government’s tax revenue target for 2021.
  • In 2020, the government managed to collect just 89.3% of its targets as the social restrictions to curb the spread of the Covid-19 pandemic dragged the economy.
  • Jokowi held his first tax amnesty program in 2016 and 2017, allowing tax evaders to come clean and declare their back taxes and hidden assets to the tax authorities, with only having to pay a much smaller amount compared to what they had to pay if the authorities caught them red-handed.
  • The program managed to collect information about IDR4,813.4tr of previously hidden assets and encouraged repatriation of IDR46tr overseas assets, data from the Finance Ministry showed.
  • Also, the tax office raised a total of IDR135tr in back taxes in 2016 and 2017, but that was not enough to cover the IDR517tr tax shortfalls over the two-year period.

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