Indonesian lawmakers have voted for a tax amnesty bill, with the programme expected to kick in on 1 July.

Uncertainty about Indonesia’s tax amnesty has to some extent ended after the Asian country’s lawmakers voted for a bill earlier this week.

The country’s House of Representatives on Wednesday finally approved the Tax Amnesty Bill, and the legislation is expected to be enacted on 1 July this year. The amnesty provides a waiver on tax liabilities along with tax administration and criminal sanctions in the area of tax, affecting income tax, value added tax and taxes on luxury items. The amnesty runs from 1 July to 31 March 2017. There has been uncertainty about this period, as previously argued by Rawlinson Hunter, the accountancy firm. 

In a note issued yesterday, Rawlinson Hunter said that for assets located in Indonesia or abroad that will be subsequently invested in the country for three years after the date of declaration, there is a rising scale of tariffs from 2 per cent to 5 per cent. For assets maintained overseas and not repatriated to Indonesia, tariffs range from 4 per cent to 10 per cent. 

The Finance Ministry in Indonesia estimates that more than $150 billion could be repatriated but some banks set the figure lower, media reports said. 

Indonesia, along with a number of other jurisdictions, has pushed for an amnesty programme to bring back undisclosed offshore assets. Indonesia remains one of the most important sources of offshore wealth held in hubs such as Singapore, Boston Consulting Group said recently, in its annual survey of the global wealth industry.

Earlier this year, a report on Indonesia, noting that the country's wealth management industry is small (only about $20 billion in assets under management compared with $1.8 trillion in Singapore), said it has potential to grow if a significant amount of offshore wealth returns home. Lawyers have told this publication in recent years that Indonesian-sourced wealth is an important revenue earner for Singapore private banks because individuals have traditionally been so distrustful of Indonesian authorities – and fearful for their financial privacy - that they have preferred to take the risk of putting money offshore. Such fears may deter some people from declaring offshore assets.

Notably, the amnesty carries a confidentiality clause under which all data and information sent in by people joining the amnesty cannot be used for investigations or criminal prosecutions against them.

Indonesia will be applying the Common Reporting Standard, a global system of disclosure of accounts and data transfer, from 2018.

The accountancy firm said the Indonesian finance ministry is optimistic that all regulations and processes will in place at the start of July.