JAKARTA: Indonesians have declared 117.3 trillion rupiah (S$12.2 billion) of assets held in Singapore, Indonesia’s Finance Ministry said on Friday (Sep 16) according to Bloomberg.
However only a small proportion – 14.1 trillion rupiah, or about 12 per cent – has been repatriated. In a statement issued on Thursday, Indonesia’s Ministry of Finance said that as of Thursday, it has received more than 20 trillion rupiah under the tax amnesty programme.
Under the tax amnesty programme that was passed by Indonesia’s parliament in June, Indonesians can declare all assets that have not been taxed and repatriate their funds at rates between 2 per cent and 10 per cent, up until Mar 2017.
Banks in Singapore are required to file suspicious transaction reports (STRs) on clients embracing the Indonesian tax amnesty, but corporate lawyers told Channel NewsAsia they do not expect this to deter their clients from taking part in the amnesty programme.
“Responding to media queries, MAS said on Thursday that it had advised banks in Singapore to encourage their clients to use the opportunity accorded by tax amnesty programmes to regularise their tax affairs.
“Banks are required to adhere to the Financial Action Task Force (FATF) standard of filing an STR when handling tax amnesty cases, similar to the practice in other jurisdictions,” a spokesperson said.
RHTLaw Taylor Wessing Partner Nizam Ismail said banks were immune from being sued by customers for breaching confidentiality by filing such STRs as it was a regulatory obligation.
The impact on customers was minimal, he suggested: “Every month, tens of thousands of STRs, I believe, are being filed. And out of these vast amounts, only a small fraction actually leads to any investigations by the authorities.”
Gibson, Dunn & Crutcher Partner Robson Lee also said he did not view the requirements as an obstruction to those who want to participate in the programme.
“What the MAS has reminded private banks recently is a continuation of what the Commercial Affairs Department of Singapore has informed banks as early as last year,” he said.
“And mind you, that was before Indonesia announced the tax amnesty programme in July this year … I don’t think the MAS intends to obstruct or interfere with what Indonesia is doing. ”
Singapore’s monetary authorities previously refuted claims by Indonesian media that several of the Republic’s banks lured Indonesian clients into leaving their assets in the country instead of repatriating them home.
In a statement on Thursday, the Monetary Authority of Singapore also said it had advised local banks to encourage their clients to use the opportunity accorded by tax amnesty programmes to regularise their tax affairs, and clarified that participation in such programmes did not in itself attract criminal investigation.
There is an estimated US$200 billion (S$273.52 billion) worth of assets held by Indonesians in Singapore, and about US$40 billion of this could go back to Indonesia through the tax amnesty programme.
This is unlikely to have a major impact on Singapore and its attractiveness as a wealth management centre, said PwC Singapore Asset and Wealth Management Tax Leader Anuj Kagalwala.
“People don’t keep money in Singapore only because of tax reasons. Many of these Indonesians may have businesses outside Indonesia and you need to have bank accounts and wealth outside Indonesia for this purpose,” he said.
“Singapore does not have capital controls, it does not have foreign exchange rules, we do not have an unstable currency, we have very strong regulatory and tax regime. We have a low tax regime. It is stable, but it’s not a tax haven. So if you put all these things together, Singapore offers a very good environment for people to park money here.”
