(Marketingmagazine.com.my) – WHAT is the best design for a tax amnesty? Some object to them all, since they reward those who have broken the law. Others argue that maximising revenue should be the goal.
The OECD nods at both philosophies, suggesting that an amnesty should cost the tax-dodger less than if he were caught by the authorities, but more than if he had been compliant from the start.
Few, however, would recommend the approach Indonesia is taking.
The government estimates that rich Indonesians have perhaps $900 billion stashed overseas. To entice some of that money home, it wants to offer an amnesty.
Parliament, which reconvened early this month, is due to take up a bill soon.
People who have hidden assets abroad will face no criminal prosecution or penalties, other than a flat fee of between 1% and 6% of the value of the assets in question, depending on how quickly they declare their stash and whether they repatriate it. (The 1% is for those who bring their money home immediately; 6% for those who take more than nine months to admit to hiding assets and keep them abroad.)
Yet even 6% is a bargain compared with Indonesia’s top tax rate of 30%. Scofflaws should see the amnesty as an invitation “to invest their money for Indonesia’s development,” says Indonesia’s finance minister, Bambang Brodjonegoro (pictured). Indonesia’s government projects $8 billion-15 billion in revenue from the scheme.
That Indonesia has a revenue-collection problem is beyond dispute. Only some 27m of the country’s 255m people are registered for tax and in 2014 only 900,000 of these paid what they owed.
Last year Indonesia took in just 82% of the tax revenue it had set out to collect. Its tax-to-GDP ratio is around 10%, compared with 13-15% for its South-East Asian neighbours. Joko Widodo, Indonesia’s president, says he wants to raise that to 16%.
Indonesia’s constitution caps budget deficits at 3%, and most governments fear to get close to the cap, since missing revenue targets requires real and immediate cuts to spending.
But by taking $10 billion or so now, the government could be leaving ten times that amount on the table.
Starting next year most jurisdictions where Indonesians are presumed to keep their hidden wealth, including Singapore, Hong Kong, Switzerland and Mauritius, have agreed to share information on foreign account-holders with their home governments as a matter of course, under an OECD scheme known as the Common Reporting Standard (CRS).
Applying Indonesia’s normal tax rates to a conservative estimate of the money to be revealed by the CRS could yield well over $100 billion, before penalties, which Indonesia levies at 2% of the tax due a month.
The leniency is puzzling. Indonesia could levy a 25% tariff on offshore funds, and their owners would still come out ahead. Nicholas Shaxson of the Tax Justice Network deems it “very likely that powerful people in Indonesia have engineered this to make sure they’re not exposed and not subject to penalties.”
But expediency is another possible explanation: Mr Brodjonegoro says that if the government waits for the CRS to take effect, “The benefit in terms of tax revenue will only start in 2019, the end of this administration.”
The Economist
APPIES Malaysia 2016 Marketing Conference open for registrations!
‘2-day MBA’ in Marketing, ‘TED of Marketing’, call it what you will, and come what may, we will see you on May 19 & 20 at the Eastin Hotel.
• 36 latest Marketing Case-Studies
• 22 marketing leaders as Judges
• 3 top-notch Keynote Speakers
* 4 Game-Changing Panel Speakers
Says Chief Judge Adam Wee Abdullah, Group CMO of CIMB Banking Group about judging the entries, “Clarity in the Objective statement is fundamental. If this is not clear, the solutions will not be clear as well. It is also important to juxtapose the expected outcome against the Objective statement so you can gauge if the strategies are aligned. It’s a bit like looking through the scope of a sniper’s rifle.”
Date: 19 & 20 May, 2016
Venue: The Grand Ballroom, Eastin Hotel Kuala Lumpur
Time: 8.30am – 6.00pm
To register, go to APPIES REGISTRATION.
Download full brochure here.
Or contact Ruby on 03-7726 2588, [email protected]
APPIES Malaysia 2016 judges:
• Abdul Sani Abdul Murad – Head of Marketing, HSBC Malaysia
• Ben Mahmud – Head of Retail Marketing, Shell Malaysia Trading
• Eric Wong – Marketing Director, IBM Malaysia
• Fiona Liao – Chief Brand Officer, Prudential Assurance Malaysia
• Jasmine Lee – Chief Marketing Officer, U Mobile
• Jauhar Munir Shaikh – FVP, Brand Marketing for F&N Malaysia
• Loh Keh Jiat – CMO, Digi Telecommunications Sdn Bhd
• Mark Ng – ASEAN Marketing Director, Castrol
• Martin Soong – Marketing Manager, Fonterra Brands Malaysia
• Matthew Ho – Regional Digital Marketing Director, Huawei Technologies Malaysia
• Nirinder Singh Johl – GM of Strategic Communications, Tenaga Nasional Berhad
• Noreen Sabrina – Senior Manager, Brand Communications – Corp Communications & Marketing, MDeC
• Pan Choi Yen – GM of Marketing, WIPRO-UNZA Malaysia
• Philip Whittaker – Group Chief Marketing Officer, Themed Attractions & Resorts
• Rizan Ismail – Head of Brand Management, PETRONAS
• Santharuban T. Sundaram – Group Marketing Manager, Permanis Sandilands
• Stephane Vilquin – Marketing Director, Campbell Soup Southeast Asia
• Syahar Khalid – Digital Engagement Manager, Nestlé Products Malaysia
• Vincent Chong – Marketing Director of Unilever Malaysia
• Zaki Zin – Marketing Director, Wyeth Nutrition Malaysia
• Zalman Aefendy Zainal Abidin – Chief Marketing Officer, Celcom AXIATA
MARKETING Magazine is not responsible for the content of external sites.
The Malaysian Marketing Conference & Festival 2024 at the Sime Darby Convention Centre is a TWO-day marketing event for all those in Marketing, Media, Advertising, PR, Digital, Data, and more….
The experience is on May 15 & 16, with Keynote Speakers, multiple tracks or Breakaway Sessions hosted by our booth partners who will show you the latest in the industry.
