Financial Services Authority of Indonesia issuing regulations to support OECD’s Automatic Exchange of Tax Information
They will guide financial services institutions so they can submit data about their customers and later this information would be exchanged with similar data from partner countries.
The regulations will be implemented from September 2018 onwards. They will guide financial services institutions so they can submit data about their customers and later this information would be exchanged with similar data from partner countries or jurisdictions for tax purposes. The regulations will deal with provisions from the Laws on Banking and Capital Markets, which regulate bank secrecy and confidentiality of customer accounts.
The AEOI application is expected to provide the Government with financial information of Indonesian taxpayers who have invested their funds in partner countries or jurisdictions, based on a reciprocity principle, helping them track tax evasions.
Last year, the Indonesian government introduced a one-time tax amnesty and discounts (Iwan Djuniardi from the Directorate General of Tax spoke to OpenGov about the ICT requirements for the scheme last year)for tax evaders who come clean about their assets. This upcoming joining of Indonesia in the pact on the exchange of information on taxation was used as a threat, complementing the discount in taxes of declared and repatriated assets.
Such a financial information exchange mechanism will also encourage the financial sector in Indonesia to prepare for global competition and transform itself into a force to be reckoned with in international financial markets, given that the AEOI policy will be applied soon in other countries.
On top of that, the OJK is drafting further provisions on the AEOI implementation, namely an OJK Circular that particularly regulates about the policy, including how to conduct due diligence on foreign customers and how to submit financial information of foreign customers to the tax authority.
Earlier, the OJK developed a reporting system called foreign customers disclosure system (SiPINA) as a platform for submitting foreign customers’ financial information.
The AEOI is an OECD (Organisation for Economic Co-operation and development) initiative to enable co-operation between the tax administrations of different countries. It deals with the challenge of taxpayers operating cross-border but tax administrations remaining confined to their national borders, by providing an open international architecture.
Along with a legal framework, OECD provides technical standards for the standardisation of formats so that information can be captured, exchanged and processed quickly and efficiently in a cost effective and secure manner by the receiving country. It also talks about ensuring data quality through data validation and adherence to general due diligence standards and encryption and transmission systems to be used.
Over a 100 countries have committed to automatically exchanging information, as at February 23, 2017.