Banking Secrecy Law Must Be Revised: Observers
18 October 2015 18:06 WIB
TEMPO.CO, Jakarta - The Perkumpulan Prakarsa (Center for Welfare Studies) executive director Setyo Budiantoro viewed that the government must revise the banking secrecy provisions in the Law on Banking to reduce illicit outflows from Indonesia.
According to Budi, Indonesia applies regulations that require citizens to report their wealth in all countries they visit to improve corporate fund management transparency.
“Ironically, the Finance Ministry in Indonesia cannot access banking data. So, the number of wealthy people paying taxes is staggeringly low,” Budi said in a discussion in Jakarta on Sunday, October 18, 2015.
Data from the Global Financial Integrity showed that illicit outflows from Indonesia in the period of 2003-2012 had reached US$187.8 billion. In addition to lack of access to banking data, the government had no human resources to contain the illicit outflows. Budi revealed that the Taxation Directorate General’s office only employed 14 staff to handle transfer pricing.
Budi Suggested that the government must form an intelligent body to investigate assets and fund management of companies listed in the stock market.
“We need to see their revenues and taxes. If they don’t add up, the companies must be penalized, instead of being rewarded with tax amnesty,” Budi added.
Financial Transparency Coalition director Porter McConnel said that the illicit issue had been in an alarming state. However, McConnel said that the regulator could take several measures to address the problem.
“The solution is to emphasize transparency and public trust,” McConnel said.
McConnel added that corporations must publicly announce owners and beneficiary of company’s profit. Several countries in Europe, McConnel said, implemented a public registration system for corporations that can be accessed by public.
Dadang Tri Sasongko, the Secretary General of Transparency International Indonesia (TII), said that the amount of illicit money was far larger than any of corruption cases in Indonesia.
“This problem is bigger than corruption. Moreover, financial crime is getting more sophisticated,” he said.
Based on a study conducted by the TII, Dadang added, many companies hid their assets by covering their corporate identities in order to avoid taxes.
“Improvement in legal instruments is necesary,” dadang suggested.