According to Wikipedia, a tax amnesty refers to ‘a limited-time opportunity for a specified group of taxpayers to pay a defined amount, in exchange for forgiveness of a tax liability (including interest and penalties) relating to a previous tax period or periods and without fear of criminal prosecution’. There have been instances of tax amnesty granted by other governments such as Italy, Spain and the United States.
According to a report by Jakarta Globe on 4 June 2015, the Indonesian government is preparing a bill to grant amnesty to perpetrators of financial crimes and is targeting to complete the bill by October this year. The financial crimes include tax evasion, money laundering, corruption, illegal logging and illegal mining. It is understood that only 4 million Indonesians out of the 250 million population pay tax. The Indonesian government is targeting to boost the tax revenue by 30% from last year.Already in place to boost tax revenue is the limited tax amnesty in the form of waiver of interest penalties provided tax arrears are paid in full not later than 1 January 2016 and waiver or reduction in administrative sanctions imposed as a result of an omission or mistake on the part of the taxpayer.
Tax experts are of the opinion that the policy of granting tax amnesty to perpetrators of financial crimes will reduce tax compliance and may be seen as unfair to those who are tax compliant.
The proposal is under review by the authorities in Indonesia and it will be an interesting development to see in this region.