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Indonesia businesses lobby for extension of tax amnesty's first phase

Wednesday, September 14, 2016 - 14:59

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Some Indonesian businesspeople are asking the government to extend beyond Sept 30 the deadline for joining a pivotal tax amnesty at the most favourable terms offered for declaring previously-unreported assets.

[JAKARTA] Some Indonesian businesspeople are asking the government to extend beyond Sept 30 the deadline for joining a pivotal tax amnesty at the most favourable terms offered for declaring previously-unreported assets.

But their request is unlikely to succeed. Finance Minister Sri Mulyani Indrawati on Tuesday brushed off speculation there would be an extension, saying "there is no room for manoeuvre".

She said all her ministry could do was offer simpler amnesty forms to speed processing for those joining the amnesty.

The tax amnesty has been pushed hard by President Joko Widodo, as his government faces large budget deficits that crimp its ability to raise spending to push up Indonesia's tepid growth rate.

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After the Golkar political party gave Mr Widodo support, Parliament in late June passed a delayed amnesty bill.

The programme, which ends in March 2017, has three phases that incentivise those to join early.

Indonesians with undeclared assets overseas are not required to bring them home, but pay a lower penalty rate if they do.

The government set a highly ambitious target, and even with increased participation this month, has collected only 6.1 per cent of this year's revenue target of 165 trillion rupiah (S$17.0 billion). The central bank governor has warned the programme might get only a fraction of its target.

The Indonesia Chambers of Commerce and Industry, which represents more than 90,000 companies, has asked government ministries to extend the first phase of low rates until Dec 31, chairman Rosan Roeslani told Reuters.

The group contends the amnesty technically started at least two weeks late due to a long Muslim holiday in July. Also, many supporting regulations were not available when it began.

"An extension would be positive as many businessmen felt the programme wasn't clear in the first place," said chamber deputy chairman Emirsyah Satar.

"It's clearer now that the government has vigorously promoted it in many roadshows, but it's a pity the period for the lowest rates is almost over."

Mr Satar said the group has not heard back from the government.

Several other business associations say many of their members support an extension.

Christian Yo, a tax advisor with Jakarta consultancy Solid Solution, said many clients are struggling to complete "the very comprehensive form" before Sept 30.

Recently, amnesty participation has improved, with 435 trillion rupiah of assets declared and some wealthy Indonesians, including Lippo Group chief executive James Riady and Erick Thohir, president of Inter Milan football club, making public their participation.

To extend the amnesty, the government would need parliament's approval for revising the law backing the programme.

Misbakhun, a member of parliament, said the government could expedite the process by issuing a regulation in lieu of law, which parliament would then vote on.

REUTERS

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