Jakarta, July 30 (Antara) - Indonesia's New Finance Minister Sri Mulyani Indrawati has vowed to ensure that the government's amnesty program, expected to earn Rp165 trillion for the state from overseas assets' repatriation, turns out to be a success.
While taking over his new office on Wednesday (July 27), Minister Mulyani admitted that tax amnesty program is part of the government's fiscal policy and the state budget management.
Therefore, the tax amnesty program, policies and the targets that have been set should be implemented cautiously. After all, proceeds from the tax amnesty program are expected to help cover the state's budget deficit as stated in the revised 2016 state budget.
The House of Representatives (DPR) passed into law the tax amnesty and amended the 2016 state budget bills at a plenary session on June 28, 2016. The amended budget has a deficit of Rp296.7 trillion.
Sri Mulyani will study the tax amnesty program comprehensively, including targets that have been set, so that the policy would provide concrete benefits when it comes to fiscal instruments and state budget expenditures.
The minister said since she is running against time, she would meet all echelon I officials of her ministry to see which programs have to be improved and which ones have to be given priority.
Minister Mulyani informed that she had been ordered by President Joko Widodo (Jokowi) to complete all regulations for the implementation of the tax amnesty scheme without any delay.
Regulations in respect of the tax amnesty plan must be completed soon, so that the program could be carried out, Minister Mulyani explained at the presidential palace on Thursday (July 28), after receiving a directive from the President on the tax amnesty plan for officials of the tax directorate general of the finance ministry.
The tax amnesty program has a specific period, and therefore, there should be no delay in its implementation. It became effective on July 15 and will remain in force till March 31, 2017, and is designed as a significant incentive for taxpayers since the compensation interest to be charged is only two percent initially.
It is expected that the tax amnesty program would run smoothly and asset declaration and repatriation by taxpayers would give a stimulus to the development of national economy.
The tax amnesty program will run for nine months, beginning July 15, 2016 to March 31, 2017. It is divided into three periods of three months each.
Those availing of the amnesty are required to pay redemption and declaration fees for the assets they have stashed abroad.
The repatriation tariff has been set at 2 percent for the July-September period, 3 percent for the October-December and 5 percent for the January-March 2017 period.
Similarly, the redemption tariff has been set at 4 percent for the July-September period, 6 percent for October-December and 10 percent for the January-March 2017 period.
At least Rp4,000 trillion worth of funds are expected to be declared and Rp1,000 trillion of these are expected to be repatriated and invested in the country. The government hopes to earn Rp165 trillion from the tax amnesty program in the form of asset redemption and declaration.
Until July 26, or one week after the implementation of the program, the government has received Rp23.7 billion as redemption money.
According to Finance Ministry Spokesman Luky Alfirman, the redemption money came as a result of declaration of assets amounting to Rp988 billion. The revenue came from 83 Letters of Assets Declaration (SPH).
Alfirman is optimistic that the number of taxpayers who issued letters of asset declarations and carried out asset repatriation overseas will increase, particularly in the run up to the end of the first period of the tax amnesty program in September 2016.
Moreover, the program has been positively responded by the market. Analyst and market player Hendri Setiadi said the stock market in Indonesia has reacted positively to the tax amnesty policy as indicated with soaring market capitalization.
The record performance has been predicted by financial analysts and market players.
Last week, market capitalization shot up to an all time record at Rp5,639 trillion, exceeding a previous record of Rp5,565 trillion on April 7, 2016.
Foreign investors have brought funds to the emerging market of Indonesian pushing it ahead of neighboring countries including Singapore, Malaysia, and Thailand.
The Indonesian Stock Exchange is open to accommodate and mobilize funds expected to be repatriated into the country as a result of the tax amnesty policy.
"The Indonesia Stock Market (BEI) would be ready to be the vanguard in accommodating the repatriated funds. The stock market could use various investment instruments to absorb the funds such as shares, mutual fund, asset securitization and real estate investment fund," Hendardi Setiadi said.
In addition, the growing inflows of funds into the country would strengthen rupiah that could lead to falling Bank Indonesia's benchmark interest rate resulting in brisker trade in stock market.***3***(A014/INE)EDITED BY INE(T.A014/A/BESSR/A. Abdussalam) 30-07-2016 19:41: |
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