TEMPO.CO, Jakarta - The Finance Ministry has sparked a polemic with its inconsistency over the minimum balance set for accounts to be monitored by the government. Overnight, it changed the minimum threshold of Rp200 million to Rp1 billion, proving that it lacked planning in policy-making. The change also betrayed the very spirit of the regulation tax transparency.
The requirement for banks to report accounts is part of the Government Regulation in lieu of Law No. 1/2017 on Access to Financial Information for Tax Purposes. The objective is to monitor account balances to calculate tax potentials. This is an important measure that will enable the government to map the country's economic structure. A comprehensive picture of taxpayer accounts will also help the government formulate better economic policies. This is not a cause for concern for account owners who pay their taxes regularly.
But protests poured in from, among others, the Indonesian Small and Medium Enterprises Association, soon after the Rp200 million threshold was announced. They argued that many of the 2.3 million account holders with a Rp200 million balance were small and medium enterprise (SME) owners. Bowing to the protests, the finance minister eventually revised the minimum balance to Rp1 billion.
The revision hardly serves the purpose of the regulation. First, the endeavor to map economic and taxation structure should be inclusive for all from those with less zeros in their account balance to magnates. How could the economic structure be mapped only with accounts amounting to a balance of Rp1 billion and above. There are 496,000 such accounts representing 64 percent of the total value of the bank accounts, meaning that the other 36 percent did not participate in the effort.
Second, a sense of fairness and a preferential option for SMEs should not be reflected by exempting them from the tax regulation. Granted, small businesses should be offered incentives, such as tax reliefs, but exemption from the tax and financial data transparency should not be part of the incentives. Modern nations build economies from tax revenues, therefore all citizens, both rich and poor, should be subject to the tax transparency regulations.
Another purpose of the account balance regulation is to prepare Indonesia ahead the new global financial information transparency era. As the world becomes increasingly connected and its financial territorial boundaries increasingly blurred, financial crimes become more and more varied--from money laundering, tax evasion to stashing away dirty money in shell companies located in tax havens. The world needs to work together to fight these crimes, and since 2016, Indonesia and the Organization for Economic Cooperation and Development (OECD) member countries agreed to exchange financial information.
In April 2018, in accordance with the OECD agreement, it becomes obligatory for banks and financial institutions to provide direct and automatic access to tax authorities. For this, the government must prepare reliable and tight reporting and monitoring systems and trustworthy tax officials. This is a monumental task that needs to be undertaken extra cautiously. Strict measures must be taken to ensure that no customer data is breached and misused. It is imperative to maintain and safeguard public trust in banks and financial institutions at all costs.
Read the full story in this week’s edition of Tempo English Magazine
