DBS Group’s team of economists assess additional tax revenue target of Rp 165 trillion from the tax amnesty is too optimistic. The response of individual taxpayers and corporate taxpayers to the Tax Act Forgiveness is not known with certainty. With the pace of government revenue and spending this time, DBS predicts tax amnesty can only add tax revenue of Rp 60 trillion.
David Carbon, an economist at DBS Group, said additional tax revenue of Rp 165 trillion, based on the assumption of repatriation of funds reached Rp 1,000 trillion and assets declared value of Rp 4,000 trillion. “There are concerns that the government was too optimistic with a target of Rp 165 trillion. Estimated value of the assets that have not been declared range is very wide and it is unclear how the response of taxpayers to the Tax Amnesty Act, “said Carbon.
In the period January-April 2016, tax revenues reached 20% of this year’s target of Rp 1546.7 trillion. To maintain the budget deficit below 3% of GDP, tax revenue from the tax amnesty should at least reach Rp 60 trillion. The tax rate on repatriated assets reached 2% -5% and repatriated funds should be locked for 3 years in the form of investment in the real sector, government bonds, and bank deposits. (*)
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