Indonesian’s suspect much of Singapore’s affluence is funded by untaxed income from its larger neighbour. Source: Flickr
The Singaporean authorities have dismissed charges that in the Indonesia’s media claiming that banks in the city-state have lured clients from Indonesia into leaving cash there rather than repatriating it.
The Ministry of Finance (MOF) and the Monetary Authority of Singapore (MAS) said the claims of Singaporean policies to “thwart” Jakarta’s new tax amnesty were false.
“Singapore has not cut tax rates, nor changed our policies in response to Indonesia’s Tax Amnesty Programme,” the joint statement announced. “Singapore thrives on being a clean and trusted financial centre. We 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.”
Meanwhile, Singapore’s embassy in Jakarta said: “We have no interest in sheltering illicit tax monies. If there is any such case of suspected cross-border tax evasion, the Government concerned can approach Singapore – we have assisted and will continue to assist in line with the international standard.”
The Centre for Indonesia Taxation Analysis’ director Yustinus Prastowo reportedly told the Jakarta Globe that Indonesian business leaders had told him of approaches by “private agents” of Singaporean banks.
He did not name the banks or the traders.
In the week Jakarta’s Vice-President Jusuf Kalla reportedly said claims about Singapore’s banks “proves what people always say that most of the money stashed in Singapore comes from Indonesia”.
And Finance Minister Bambang Brodjonegoro was quoted saying the rumoured Singaporean bank scheme was an attempt to “challenge” Jakarta.
Bambang unveiled his tax amnesty on July 18 to grant personal tax rates to previous tax evaders who declare previous earnings between before next March.
Taxes will span 2 per cent to 10 per cent, depending on how soon people declare previously untaxed funds and whether the assets are sent home.
The rates are well below personal income tax rates in Indonesia, which range from 5 to 30 per cent, although only 27 million of the 250 million Indonesians are registered taxpayers, with around 1 million filing tax reports.
Private bankers estimate that about US$200 billion in Indonesian assets is managed invested in Singapore.
“Singapore banks support this tax amnesty programme from Indonesia,” Tan Su Shan of the Private Banking Industry Group said. “Tax amnesty programmes can be a useful tool for individuals to regularise their tax affairs. Banks in Singapore will provide the necessary support for their clients who participate in the programme.”