Credit Cards

Credit Cards to be Removed from Obligatory Tax Report for Expats

New rules will make filing tax returns and obtaining an exit visa a little easier for expats.

This week the Directorate General for Taxation said it plans to remove credit card transactions from the list of information needed by tax authorities.

According to Bisnis, the General Director of Tax, Ken Dwijugiasteadi, said the data was unuseful because it reflected money owed to the issuing bank of the card and not the holder’s income.

“It wouldn’t be accurate,” Dwijugiasteadi said, according to the report, adding that his office has already sent a letter to the heads of the country’s lenders alerting them of the change. “We’ve been postponing the implementation of this policy. But now, we won’t be asking banks for the credit cards anymore.”

That’s because in large part the government doesn’t need it anymore. Indonesia is harmonizing some of its banking rules to bring it into line with a 2011 agreement that gives it access to overseas banking details of expats.

Known as the Convention on Mutual Administrative Assistance, signatories will exchange data about its foreign nationals with authorities in their home countries. While tax money from the country’s 65,000 or so expats is a nice bonus, the real purpose of the pact is to help Indonesia hunt down its own tax cheats and pressure them into transferring their money home.

As a percentage of its economy, only a tiny fraction actually pays taxes. This year the government expects its tax take to ring in at 11.7 percent of its GDP. For the region, it’s small potatoes. In Malaysia the proportion is closer to 15 percent.

Authorities have said they expect Indonesia’s tax amnesty, which wrapped up at the end of March, to yield data that will help it track overseas funds and better calculate what the government has coming to it. The amnesty helped woo Rp.147 trillion (US$11 billion) back into Indonesian assets.

 

See: Indonesia Targets Tax Cheats With New Bank Rules

 

Image credits: HaloMoney

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Oliviana Handayani is a writer at Content Collision.