What was once dreaded by bank customers is now a reality with the issuance of a regulation that opens the door for tax officials to scrutinise banking data.
The Indonesian government has issued a regulation in lieu of law (Perppu) on financial information access for taxation purposes.
A Perppu is the equivalent of a law and can be issued in urgent cases. According to local media reports it comes into effect immediately.
President Jokowi Widodo signed the regulation to give tax authorities access to information on accounts held at financial institutions, including banks.
The regulation was signed last week as part of Indonesia's pledge to join an Organization for Economic Co-operation and Development (OECD) -led global initiative, the Automatic Exchange of Information (AEOI).
Offshore Assets Repatriated
The government considered it «very urgent» for the tax office to get wider access to financial data, according to the regulation. Failure to meet AEOI commitments could lead to significant losses and disrupt stability in Southeast Asia's largest economy, it said.
Making reforms to the country's tax system was one of President Jokowi's priorities which led last year to the launch of the high profile tax amnesty.
The amnesty, was said to have garnered $10.16 billion of additional tax revenue to the government. Almost 1 million tax payers joined the program which included repatriating offshore assets many of which were thought to have been kept in Singapore.
