One property developer claimed participant of the tax amnesty program has expressed his/her interest to use the repatriated funds to acquire one of its buildings. This, of course, could be a marketing gimmick, because the property company is launching an initial public offering (IPO). So, the said taxpayer should have planned to repatriate quite a big amount of money.
As of today, about 6,500 taxpayers have participated in the tax amnesty program, declaring a total of Rp37.8 trillion worth of assets. The State collected Rp761 billion of redemption fees from the declared assets. We’re now half way to the end of first phase (until September 30, 2016), but the first Trillion out of Rp165 Trillion targeted in the Revised State Budget 2016 yet to be achieved.
The pace looks good with 69% growth of total declaration of assets from last week, with stronger growth in the declaration of net foreign assets. Total assets repatriated, however, grew only 38% in the past seven days to reach Rp1.26 trillion. The combined offshore assets declared and repatriated was still below Rp6 trillion, nothing compared to the amount repeatedly mentioned by President Jokowi.
Once again, in order to achieve the target of Rp165 trillion, we need declaration of Rp8000 trillion of assets, domestic and offshore. General assumption is that most taxpayers would participate in the first phase to get lower redemption tariffs. Accordingly, we have to wait until September 30 to make a better assessment about the program.
In general, however, some believe the repatriated funds will end up in secured investment portfolios, including land and buildings, especially those worried about maximum deposit protection of Rp2 billion per account. Others might invest in bonds or State treasury.
In the stock market, the tax amnesty euphoria yet to end. Net buy of Indonesian stocks by foreign investors reached Rp39.7 trillion as of Thursday, Aug 18, near its all time high. Net buy by foreign investors reached Rp17.3 trillion in 2006 (full year), Rp33 trillion in 2007, Rp18 trillion in 2008, Rp21 trillion in 2010, Rp15.9 trillion in 2012, and Rp43 trillion in 2014. Last year, foreign investors recorded net sell of Rp23 trillion worth of stocks.
WORK IN PROGRESS>>>
*) Florentina Tantri contributed to this article
DISCLAIMER: NO POSITION IN STOCKS MENTIONED IN THIS ARTICLE
