The Indonesian Government suspects that Singapore is cutting its tax rates to thwart its own ‘tax amnesty’ programme. The Indonesian programme is aimed at its billionaires who are suspected of hiding their wealth abroad to evade tax. The amnesty is expected to draw about 165 trillion rupiah (S$16.9 billion) for the government. It is believed that many such billionaires have parked their money here.
The Indonesian media reported recently that Singapore banks have sought to stop the migration of such funds by offering to pay the tariff difference between declaring the assets and not repatriating them to Indonesia between July and September.
Mr Yustinus Prastowo, the executive director of Centre for Indonesia Taxation Analysis, has claimed that such rumours may not be unfounded and that he heard about the offer first-hand from Indonesian businessmen who have been approached personally by private agents.
The Indonesian House of Representatives Speaker Ade Komarudin warned Singapore not to sabotage its tax amnesty programme saying: “I want to remind Singapore to put away the policy and I hope that (reports of Singapore thwarting the programme) are not true, because it will very much obstruct the success of the Tax Amnesty Law. We’ve been friends for a long-time, don’t ruin it for your ego.”
Indonesia’s Vice-President Jusuf Kalla said: “Every country wants to survive. It (only) proves what people always say that most of the money stashed in Singapore comes from Indonesia.”
Minister of Finance Bambang Brodjonegoro said : “Just let it be, I am not afraid of Singapore which is just a small country like that.”
The Ministry of Finance and Monetary Authority of Singapore responded to such allegations and said: “(Singapore) subscribe to internationally agreed standards for combating money laundering and for exchange of information. If there is any case of suspected cross-border tax evasion, concerned authorities can approach Singapore – we have assisted and will continue to assist in line with the international standards.”
“I don’t understand why there is this constant attempt to put us down; and taunting us
that we are small. Yes, we are a little red dot. We may be small. But we are respected and successful. And our people lead meaningful lives. And we don’t live in fear of anyone else.”