Indonesia’s tax Amnesty the World’s Most Successful Repatriation Programs


Indonesia’s tax Amnesty the World’s Most Successful Repatriation Programs. Indonesia’s latest tax amnesty program is turning out to be one of the world’s most successful repatriation programs.

Already, Indonesians have declared 1,029 trillion rupiahs ($76 billion) of hidden assets, with 69% in domestic assets, 25% in foreign assets not repatriated and 5% in foreign assets repatriated back. A total of 90,000 people have participated in the program.

The overall response is already well above earlier market expectations of $30-50 billion in declared assets. JP Morgan now thinks the final tally by next March could double to 2,000 trillion rupiahs, creating fiscal income to the tune of 0.3-0.5% of total GDP.

“We do not rule out a reduction in the nominal tax rate, if the government judges the amnesty as successful,” notes analyst Aditya Srinath, adding:

After the last tax amnesty in 2008 (which yielded revenues of Rp7.5trn) the then (and current) Finance Minister Sri Mulyani cut personal tax rates by 5% to 30%. Corporate tax rates were also cut over two years from 30% to 25%. In response in 2009, the revenue from personal income taxes grew by 13% y/y, and accelerated further in the next two years. Corporate tax revenues were more volatile, which we attribute to the larger impact of commodities.

Indonesia is in a boom. The iShares MSCI Indonesia ETF (EIDO) has soared 28% this year, mostly from stock gains. The rupiah rose 5%.