Indonesia and Hong Kong have agreed to share financial information giving the Indonesian tax office access to data on taxpayers who have accounts in north Asia's wealth management hub.
The government of Southeast Asia's largest economy, is determined to bring back billions of dollars it believes is stashed abroad.
Indonesia's tax office has promised it will step up scrutiny on wealthy Indonesians not participating in the country's high profile tax amnesty.
Based on the result of Indonesia's tax amnesty program, Hong Kong was the third-biggest source of repatriated funds.
Shell Companies Hub
Following the Panama Papers scandal last year, which showed that the Chinese Special Administrative Zone, was the most active center in the world for the creation of shell companies, Hong Kong's government has come under pressure.
While shell companies have many legitimate purposes the vehicles can also be used to hide assets and potentially evade taxes.
Tax Transparency
Indonesia's Director-General of Taxes and Hong Kong's Commissioner of Inland Revenue have now signed a «Bilateral Competent Authority Agreement,» a statement issued by the Hong Kong authorities said.
The move is in line with a global effort to boost tax transparency. An increasing number of countries have committed to the automatic exchange of information (AEOI) led by the Organisation for Economic Co-operation and Development.
