JAKARTA: Singapore has given assurances that Indonesians declaring assets in the city-state as part of Jakarta’s tax amnesty will not have their participation itself considered a suspicious act, Indonesia’s finance minister said.
Sri Mulyani Indrawati told reporters on Friday she got the assurance from Deputy Prime Minister Tharman Shanmugaratnam, who she called after Reuters reported on Thursday that private banks in Singapore are sharing with a local police unit dealing with financial crime the names of clients joining the amnesty.
After the Reuters story was published, the Monetary Authority of Singapore confirmed it has advised banks in Singapore to encourage clients to use tax amnesty programmes and that banks have to file a suspicious transaction report (STR) when handling tax amnesty cases.
MAS said participation in an amnesty in and of itself would not attract criminal investigation in Singapore, adding “The expectation for an STR to be filed on account of a client participating in a tax amnesty programme should therefore not discourage clients from participation.”
Indrawati on Thursday night told Indonesian media that the news on names being shared “could potentially disturb our taxpayers, especially those who live or put their money in Singapore.”
‘Protected by law’
She said many in Indonesia asked her about Singapore’s reporting requirement as some taxpayers became worried that when they join the amnesty to clear up their tax records, it could be seen as money laundering activity by Singapore authorities.
“Under tax amnesty rules, an Indonesian who owns an account in Singapore and wants to join the amnesty should not be considered as suspicious… There is no reason to be afraid. Joining the tax amnesty is a good action, it is legal and protected by law,” the former World Bank managing director said on Friday.
Singapore, where Indonesians hold an estimated $200 billion in private banking assets – 40 percent of the island’s total private banking assets – made tax evasion a money-laundering offence in 2013.
Indonesia’s amnesty programme, launched in July, aims to help fund the government’s large budget deficit and broaden the country’s tax base.
As of Friday, the government has collected 22.7 trillion rupiah ($1.73 billion) of tax amnesty revenue or almost 14 percent of its ambitious target of 165 trillion rupiah. Around 552.7 trillion rupiah of assets have been declared by more than 60,000 taxpayers.
As of Sept. 6 – the last breakdown available from Indonesia’s finance ministry – Singapore accounted for 85.4 per cent of assets declared outside Indonesia, followed by Australia with 6.7 per cent, the United State 2.5 per cent and Switzerland 1.8 per cent.