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Billions in tax to return to Indonesia

In a country where fewer than a million of the 250 million-strong population pay tax, the government has passed a bill hoping to claw back billions.

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Source: AAP


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Billions of dollars parked by Indonesians in overseas accounts is expected to flow back into Indonesia as parliament passes a tax amnesty bill that allows evaders to avoid prosecution.

After months of heated discussion in parliament, the changes were finally passed into law this week, with the aim of clawing back 16.5 trillion rupiah ($16.5 billion) in tax in a country where fewer than a million of the 250 million-strong population actually cough up.

"What we hope from this capital inflow is that we can use it to finish unfinished infrastructure," President Joko Widodo said.

The bill, which has its own logo - a golden bird with the tagline "reveal, redeem, relieve" - is hoped to be a boon for the country's slowing economy.

Finance Minister Bambang Brodjonegoro said it would be used to address the country's budget shortfall, which is slated to be slashed by 90 trillion (A$90 billion) to account for declining revenue.

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The tax money is expected to come mainly from accounts in Europe.

"Many bank accounts, apartments and property have not been reported to the tax authorities," he told Tempo Magazine in an interview published on Wednesday.

Any information presented during the amnesty cannot be used to prosecute people for tax evasion or corruption, he added.

More than $US200 billion ($A268.62 billion) is estimated to have been parked overseas by well-off Indonesians, in places such as neighbouring Singapore, effectively allowing them to evade their tax responsibilities.

Vice president of the Indonesian International Tax Society, Danny Darussalam has previously told AAP the amnesty was urgently needed to allow the government to build an accurate picture about its tax basis - something which it does not now have.

Indonesia will also need to clean up the tax sector where some officials have been happy to look the other way in exchange for a cut of their own.

In one of the more high-profile cases, former tax official Gayus Tambunan was sentenced to seven years' jail in 2011 for pocketing at least $US2.7 million from big companies to help them avoid paying taxes.

Indonesia has scored 36 out of 100 on the global watchdog Transparency International's Corruption Perceptions Index, with zero being highly corrupt.


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