18 Jan 2018
Automatic Exchange of Financial Account Information Singapore - Indonesia
Following Singapore’s signing of the Multilateral Competent Authority Agreement (MCAA) on the AEOI under the Common Reporting Standard (CRS) on 21 June 2017, Singapore has listed Indonesia as of their intended partners under the MCAA.
There are still a lot of people and entities that believe that it would take a long time to rule the AEOI between Singapore and Indonesia. Confidentiality and data protection was the big issues for Indonesia to achieve that as part of requirements from Singapore government to apply AEOI with Indonesia.
On 10 January 2018, Karlis Salna from Bloomberg wrote that Indonesia’s deal with Singapore to share financial information will have positive implications for Indonesia’s revenue collection based on information from Moody’s investors service sovereign analyst Anushka Shah.
What are the tax implications for Indonesia tax payers?
For those who have financial transactions / bank accounts / financial investments in Singapore, we recommend to prepare the following actions:
1. Records the above Financial Account Information since 1 January 2017 including Revenue that earned in Singapore in more detail.
2. Checking and reviewing Singapore-Indonesia tax treaty.
For example: Although interest on time deposit is free of withholding tax in Singapore, it will be considered as worldwide income for Indonesian taxation.
3. For those who has joined tax amnesty, but they still have undisclosed assets, there is still a chance to amend before it is subject to tax audit.
The (final) tax rate will be 30% for individual, 25% for company or 12,5% for certain tax payers.
The advantage is 200% sanction can be avoided as long as the tax audit has not been started. Government still give a chance to ignore 200% penalty (I personally call it as 'tax penalty amnesty') before the authority do the tax law enforcement.
4. Maintaining of the records and reports properly and continuously for all the above financial accounts for preparation of tax return Is a wise action.
Agung Tjahjady SH, CLA, CPA, MM, BKP (Managing Partner)
Registered Tax Consultant, Advocate
+62 816 825 348
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