Jakarta must signal tax amnesty won't recur: OECD

Mumbai

INDONESIA'S government must make it clear to errant taxpayers that an amnesty programme, which has revealed almost US$300 billion in undeclared assets, is the last chance to fix their affairs before full penalties are applied, the Organisation for Economic Co-operation and Development said.

"Authorities must communicate clearly that this offer will not be repeated," it said in a report on Indonesia's economy released on Monday in Jakarta. The amnesty was well-timed, the OECD said, as it comes within two years that global rules will be adopted to allow countries to exchange information to reduce the risk of tax evasion.

The government must signal that the Automatic Exchange of Information regime "will be used to locate undeclared assets and that full penalties will apply", the group said.

With the deadline for the tax amnesty's most generous phase having ended on Sept 30, the number of people and institutions participating in the programme stands at 421,037, with 3,863 trillion rupiah (S$414 billion) of assets declared. The government has earned 97.7 trillion rupiah in revenue from penalties, according to a tally on the Finance Ministry's website at 1pm local time on Monday.

Repeated tax amnesties in OECD countries had "been characterised by only temporarily increased tax revenues and encouragement of future evasion", according to the report. Indonesia had previously implemented amnesties in 1984 and 2008, it said.

The government had projected as much as 165 trillion rupiah in revenue from the programme to help fund President Joko Widodo's ambitious infrastructure plan and offset a slowdown in South-east Asia's biggest economy. BLOOMBERG