photo: kompas.com

According to Reuters, three private banks in Singapore are sharing with local police the names of Indonesian clients who are taking part in Indonesia’s tax amnesty program.

As Kompas, an Indonesian news portal, reported on16 September, this may disrupt the Indonesian government’s tax amnesty program.

Singapore’s banking sector is also worried that this move could damage their business, especially in relation to the status of their Indonesian customers.

At the end of July this year, banks in Singapore attempted to hold on to the money of Indonesian customers by offering an interest rate that covered the difference between the amount of repatriated funds and declared assets of customers taking part in the tax amnesty. Kompas reported that the Singaporean authorities said there was no official government policy on this matter,

The requirement to file suspicious transaction reports (STR) was issued after a motion by Singapore’s Commercial Affairs Department (CAD)—a police unit that deals with financial crime—had been resisted by banks who were worried about losing their customers.

The police’s efforts were augmented this year by the Monetary Authority of Singapore (MAS).

A MAS statement confirmed that it has advised banks in Singapore to encourage their clients to use tax amnesty programs to regularize their tax affairs.

“Banks are required to adhere to the Financial Action Task Force (FATF) standard of filing a suspicious transaction report (STR) when handling tax amnesty cases, similar to the practice in other jurisdictions,” it stated on Thursday.

The FATF is a global body that conducts regular evaluations of countries’ anti-money laundering standards.

The MAS was moved to act after the implementation of the Indonesian government’s tax amnesty program, which aims to attract and redirect funds, especially fresh funds from Indonesian citizens who have saved or invested abroad.

According to a senior executive at a Singapore bank, if a customers tells you he/she wants to participate in a tax amnesty, and there are suspicions that the customer’s assets are not compliant with existing rules, it is necessary to report this to the authorities.

Indonesians are major investors in Singapore’s property market, and many use banks in Singapore to invest in currencies or regional stocks. It was recently revealed that Indonesian citizens hold an estimated total of US$200 billion (S$272.5 billion) in private banking assets in Singapore; this is about 40 percent of Singapore’s total private banking assets.

The secretary of the Singapore Embassy in Indonesia, when contacted by Kompas in Jakarta, said coordination was still ongoing with relevant officials regarding requests for confirmation.

On its Facebook page, the embassy only quoted the MAS statement, stating that Singapore’s banks encourages customers to take part in the tax amnesty, and that a police investigation is commenced in Singapore only when there are reasons to suspect that a criminal offense under Singapore’s laws has been committed.

image: facebook.com/SingaporeEmbassyJkt
image: facebook.com/SingaporeEmbassyJkt

Director General of Taxation, Ken Dwijugiasteadi, responded to press questions in Jakarta that financial sector policies in Indonesia were not within his area of focus.

For that reason, he was unwilling to comment on the policy of the Singaporean authorities and how it may potentially change the minds of Indonesian citizens who were considering taking part in the tax program.

Mr Dwijugiasteadi said, “The tax amnesty program has nothing to do with money laundering or other matters. We are not interested in where the money comes from.”

But he also said, “I don’t think Indonesians are afraid, a lot of Indonesians in Singapore have already joined the amnesty.”

Bank Indonesia Governor, Agus Martowardojo, said that the central bank’s modeling suggested the amnesty would secure just 11 percent of its targeted revenue this year.

The Indonesian tax office said 394 trillion rupiah (S$40,876,165,000) of assets had been declared as of 13 September.

On Thursday (15 September) night, penalty payments generated through the tax amnesty program had reached Rp 22,7 trillion (S$2,355,000,000).

The spokesperson for Indonesia’s Directorate General of Taxation, Hestu Yoga Saksama, asked: “The question is, why has it only been implemented now. If the money is the result of money laundering, then the ones that should be arrested are the banks over there.”

Meanwhile, Sofjan Wanandi, the Indonesia Employers Association’s Advisory Council chairman, implied the move was a means for banks to alarm customers who were considering shifting assets by taking part in the tax amnesty program.

“Indonesian fund owners in Singapore need not worry about legal threats while participating in the tax amnesty,” Mr Wanandi said.

 

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