Tax Amnesty to Cleanse Indonesia Underground Economy, Riady Says


Bloomberg.com, Indonesia’s tax amnesty will potentially help clean up the “underground” economy as people build more trust in the government, said billionaire Mochtar Riady, chairman of Lippo Group.

“The uncertainty in politics and the economy led to a big underground economy,” Riady, 87, said in a Bloomberg Television interview in Singapore. “Indonesia is very lucky to have Jokowi, who made an important decision. Our tax base will be increased so much and the government will have substantial tax income.”

President Joko Widodo has staked his credibility on an ambitious tax amnesty plan aimed at repatriating Indonesian cash stashed overseas, while giving evaders a way to come clean. He ordered his cabinet to summon the biggest taxpayers, especially those with assets held overseas, to ensure they participate. Since the amnesty began in July, the finance ministry has collected 97.2 trillion rupiah ($7.5 billion) from the program, or 59 percent of a targeted 165 trillion rupiah.

Under the plan, Indonesians pay a tax rate starting at 4 percent on declared property or funds left overseas. The level increases in stages to 10 percent as the amnesty period draws to a close in March. Those who send their money home and keep it in Indonesia for at least three years pay 2 percent and are offered a wide range of possible investments. Those who don’t declare and are found out face paying 200 percent of the tax owed.

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