Tax Amnesty Repatriated Fund Becomes an Additional Capital for Participating Companies

JAKARTA. The government will expand the types of investment instruments that will be used to accommodate repatriated funds in the Voluntary Disclosure Program (VDP) or tax amnesty volume II.

If referring to Law Number 7 of 2021 on Harmonization of Tax Regulations (HPP), repatriated funds can only be stored in special State Securities (SBN), downstream of natural resources (SDA), or renewable energy.

Citing kontan.co.id, the government is currently considering opening up opportunities for the placement of repatriated funds in the ongoing business activities of taxpayers participating in VDP.

Read: Voluntary Disclosure Program, New Label of Tax Amnesty Volume II

The option is proposal from a number of business actors so that the incoming repatriated funds are not only stored in an instrument but rotated back in economic activities.

Minimum of Five Years

However, this policy should be accompanied by supervision to ensure that these funds will remain in Indonesia for at least five years.

This period is longer, compared to the tax amnesty program in 2016 which was only pegged at three years.

This provision will be regulated in the Minister of Finance Regulation (PMK), which is currently being drafted and is expected to be completed in mid-December 2021.

For information, the VDP will last for six months, from 1 January to 30 June 2022 through two policy schemes.

The first scheme will target 2016-2017 tax amnesty participants—both individuals and corporates—who have not had time to disclose their assets from 2015 and earlier.

In essence, these former tax amnesty participants are given another opportunity to declare, repatriate, and invest their assets domestically.

To be exempt from criminal tax sanctions, they are obliged to pay the final income tax as a tribute or redemption money divided into the following three asset categories and rates:

• 11% for asset declaration
• 8% for repatriated foreign assets and domestic assets
• 6% for repatriated foreign assets and domestic assets which are invested in govt. securities/downstream/renewable energy

While the second scheme is intended for individuals—not corporates—who have not reported 2016-2020 acquired assets in the Tax Return. Unlike tax amnesty alumni, VDP participants are subject to tribute or final income tax at a higher rate.

• 18% for asset declaration
• 14% for repatriated foreign assets and domestic assets
• 12% for repatriated foreign assets and domestic assets which are invested in govt. securities/downstream/renewable energy.