Jokowi to sign Tax Amnesty Law soon

JAKARTA. President Joko Widodo (Jokowi) will soon sign the Tax Amnesty Law after the House of Representatives moved to pass the tax amnesty bill into law on Tuesday.

"The President has 30 days to sign the law," Cabinet Secretary Pramono Anung said at the State Palace on Wednesday.

Most important, Pramono continued, were instruments to facilitate inflows from the tax amnesty program. The government estimates that additional tax revenue from the program could reach Rp 165 trillion. He said the program would also have a multiplier effect on development and economic growth.

"The government does not merely think about getting overseas funds to enter into the state budget; most important is the money from both tax declaration and repatriation to use for development," he added.

The House passed the much-delayed Tax Amnesty Law and approved revisions to the 2016 budget yesterday. Under the new law, taxpayers who declare previously undeclared assets will be taxed at between 2% to 10%. Meanwhile, small and medium enterprises will be offered special tax rates of 0,5% to 2%, depending on the size of their declared assets.

Morgan Stanley estimated that the tax amnesty would increase government revenue by 0,9% of gross domestic product (GDP) and that 2016 government revenue was likely to rise 8,5% year-on-year. (Ayomi Amindoni)