Thousands of Indonesians queued for hours yesterday to get the most attractive terms on offer under a tax amnesty that’s recovered strongly after a slow start and which the finance minister calls the most successful a country has had.
The amnesty, which runs until March, aims to provide the government with billions of dollars in revenue to help cover a large fiscal deficit.
Facing government threats of an unprecedented crackdown on tax evaders, nearly 330,000 Indonesians have joined the tax amnesty scheme and declared $250bn of assets since its launch in July.
Yesterday marks the end of the programme’s first phase, during which the lowest penalty of 2% on previously unreported assets applies.
The penalty rates rise 1-2 percentage points today and rise again from January 1 for the final phase.
“I don’t want to miss this. If the value of what I declare is big, than one percentage point matters,” Lenna Yovanca, an employee in the fashion industry, said while waiting with scores of others outside the main tax office in Jakarta.
As of afternoon yesterday, 328,611 taxpayers had signed up, declaring 3,441tn rupiah ($263.74bn) with 134tn rupiah pledged to be repatriated back to Indonesia, according to a government website giving updates.
Indonesians who declare assets overseas are not required to bring them home, but pay a lower penalty rate if they do.
The bulk of Indonesia’s offshore assets are believed to be in Singapore.
To date, the amnesty has generated 97tn rupiah in government revenue, or nearly 60% of Jakarta’s 165tn rupiah target.
In the past few days, people wanting to join the amnesty started lining up outside tax offices at 3am, officials said.
Some of Indonesia’s wealthiest have also signed up.
Tax offices have stayed open until midnight.
“There has been rapid development this month,” Finance Minister Sri Mulyani Indrawati told reporters on Thursday.
The former World Bank managing director told a parliament hearing that while many countries have done tax amnesties, Indonesia “is at the highest position” among them with revenue collection equivalent to 0.65% of gross domestic product.
India received revenue representing 0.58% of GDP, Chile 0.62%, Italy 0.2% and South Africa 0.17%, Indrawati said.
Wellian Wiranto, OCBC economist, wrote that the success of the amnesty “marks the start of a silent paradigm shift that would change Indonesia’s political economy dynamic for the better”.
Wiranto noted that Indonesians who join the amnesty will “learn to demand a say in how their money is spent by the government” after they commit to paying taxes on their income.
To encourage more amnesty participation, the government is letting participants declare their assets and pay a penalty by yesterday, but submit paperwork by December 31.
Not everyone has been happy about the amnesty.
A lawsuit challenging it as forgiving past crimes of rich taxpayers has been filed in the Constitutional Court, which will rule at a later date.
On Thursday, thousands of workers protested peacefully against the amnesty in Jakarta.




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