[JAKARTA] Indonesia and Singapore have agreed to step up efforts to share tax-related information to tighten loopholes on tax evasion in each other's countries, Indonesia's finance ministry said.
The commitment came after Indonesia' Finance Minister Bambang Brodjonegoro met his counterpart Tharman Shanmugaratnam in Singapore on Monday, the ministry said in a statement.
Indonesia and Singapore have an agreement to exchange tax-related information upon request, including data from financial institution and individuals, since 1992. "Exchanging information by request is not enough to reveal all assets hidden by citizens of both countries. Therefore, to accelerate information flows, Indonesia and Singapore have committed to exchange information automatically to complement the mechanism for information exchange by request," it said.
The mechanism should start as early as 2017, or at the latest, by end of 2018, the statement said. Both countries have also agreed to amend local legislation to support the exchange of information.
Singapore's finance ministry could not be immediately reached for comment.
In a bid to tackle cross-border tax evasion, countries across the world are signing up to new standards drawn up in 2013 by the Organisation for Economic Co-operation and Development (OECD) for "automatic exchange of information". Under these standards, countries can sign reciprocal agreements that they will automatically share certain pieces of financial information about each others' taxpayers.
Indonesia's new president Joko Widodo has made improving tax collection as one of his priorities. During his campaign, he pledged to increase Indonesia's tax ratio to 16 per cent of gross domestic product from around 12 per cent now.
Many wealthy Indonesians are known to have assets in Singapore.