[JAKARTA] Indonesians have declared 117.3 trillion rupiah (S$12.2 billion) of assets held in Singapore under the government's tax amnesty program, though only a small proportion of that figure has been brought back home, Indonesia's Finance Ministry said Friday.
Of the total Singapore assets declared to the Indonesian government as of Sept 15, only 14.1 trillion rupiah, or about 12 per cent, has been repatriated, the ministry said.
Under the amnesty program launched in June, Indonesians can pay a tax rate starting at 4 per cent on declared assets which they choose to leave overseas.
The rate increases in stages to 10 per cent as the amnesty draws to a close in March. Indonesians who agree to repatriate their assets, for a period of at least three years, are offered a rate of only 2 per cent, as well as a range of possible investments.
Indonesia is banking on securing 165 trillion rupiah worth of tax revenue from the amnesty, which would help offset traditionally-poor tax collection rates while keeping the budget deficit under a mandated 3 per cent threshold. Last month, the central bank said it was getting ready to stop the rupiah from strengthening too much on the back of funds coming home as part of the amnesty.
However, in an indicator that the collection program might be faltering, Indonesia's Finance Ministry earlier this week removed a progress bar it was using to compare amounts received against the 165 trillion rupiah target from the website it set up to provide information on the tax amnesty.
The government has received 22.7 trillion rupiah so far, the ministry said Friday.
"Indonesia's ambitious tax revenue and fiscal deficit targets look to be under threat given the anemic tax amnesty inflows so far," analysts at Australia & New Zealand Banking Group Ltd said a report Friday.
Jakarta also faces political backlash from the amnesty, which has been criticized by the Organisation for Economic Cooperation and Development as offering rates that are unfair to law-abiding taxpayers.
On the other hand, Indonesia's Constitutional Court could clear up some doubts about the future of the program when it rules on petitions brought by civil society groups which are seeking to nullify the amnesty.
A positive ruling "should remove the uncertainty that may be hampering more participation," said Euben Paracuelles, a Singapore-based economist with Nomura Holdings Inc, in a report Friday.
"We also see it likely that as the number of participants increases, this could snowball and encourage even more participation."
Responding to media queries, the Monetary Authority of Singapore (MAS) said that it has advised banks in Singapore to encourage their clients to use the opportunity accorded by tax amnesty programmes to regularise their tax affairs.
In Singapore, banks are required to adhere to the Financial Action Task Force (FATF) standard of filing a suspicious transaction report (STR) when handling tax amnesty cases, similar to the practice in other jurisdictions. Participation in a tax amnesty programme, in and of itself, would not attract criminal investigation.
Assets held in Singapore account for about 75 per cent of the total declared so far under the amnesty, the Indonesian Finance Ministry said.