Promoting The Benefits of Tax Amnesty

Not all tax policies are warmly welcomed and the one presented by this nation on Tuesday afternoon (28/06) was met with considerable degree of shock. On that day after long time of debates and controversy, the draft of Tax Amnesty bill, proposed by government, finally was ratified by House of Representative. The decision sent shockwaves that rattled more people’s perspective. More parties, including academics, observers, politician, and taxpayers, have kept a close eye on this Tax Amnesty issue since it emerged and submersed for about a year ago.

Attention focused to Tax Amnesty is split into an unstopable pros and cons. Those who stand behind this policy argue that it is Tax Amnesty as the only short-term solution to deal with the complexity of tax administration problem and as way to start a new page in term of reform agenda. Contrary speaking, there are those who think that Tax Amnesty is a trap to give a golden ticket for taxable illicit money that has been hidden for years by villains.

Rationale basing Tax Amnesty lies in both funding problem and the lack of taxpayer’s compliance. These two issue lead to limited fiscal movement to run the development program by government. Through the amnesty, taxpayers are allowed to declare their unreported net wealth without being punished. Tax Amnesty is only given to taxpayers if they meet the citeria including: a willingness to reveal the wealth that has been hidden by far; not being subject to criminal litigants, pay the redemption money based on the determined tariff, and bring back the wealth to Indonesia for having lower rate (the option of fund repatriation).

There is repatriation scheme to accommodate long term effect, by receiving the fund that are gathered from the repatriation, government will put them into several investment instrument that the taxpayers choose. An audacity of possessing fresh fund from repatriation is rooted in the fact that there are about Rp2.800 trillion illicit money transaction during 2004-2014, the years where shortfall in tax revenue took place. That money are supposed to be taxable income that has never been reported by the owner (uncompliant taxpayers).

Fiscal Policy Board Ministry of Finance predicted that the tax revenue will be leveraged up to Rp165 trillion and it will enable repatriation of funds for Rp1.000 trillion. This is one of the best thing in Tax Amnesty that leads to another good things. The additional tax revenue collected will be followed the information of taxpayer’s source income that is very useful as an object of compliance monitoring in the future. In the other hand those who participate by repatriating their fund in some optional investment instrument will strengthen the economic activity that at certain point will end up greater effect aggregatively.

As said Tax Amnesty not only provides benefits to mend the economic condition and maintaining tax revenue in the future but also bring positive impact for the society by pushing this nation to have sustainability source of funding without help from donors and Tax Amnesty providing the path to go there by renewing taxpayers database, this will surely ease the supervising of taxpayers tax behaviour. Along with the increase of tax revenue, there will be a chance to provide more jobs for the unemployment. This is an effect of giving incentives within the amnesty, the incentives will boost the entities’ liquidity that can grow new industrial activities which need workers. Another benefit that Tax Amnesty could give to the society is a probability to lower the interest rate by the banking because the fund from repatriation can improve domestic economic activity which at certain point will ease the SMES entity to have capital aid to expand their business and coming into formal sector.

Surely all the benefit will be for us to enjoy if we all focus on ensuring that Tax Amnesty is totally supported by all of us and ready to leave the controversy miles behind because we are now in the point of no return.