Property News · August 23, 2016

Invest in real estate, tax amnesty participants in Indonesia urged


Or face “hell,” Finance Minister warns
View of Surabaya City, Indonesia. Image credit: Andreas Hie/Shutterstock
Those granted amnesty under the Indonesian government’s program of tax repatriation are being encouraged to pour their money back into real estate.
At a seminar in Jakarta on Friday, Financial Services Authority head Muliaman Hadad urged beneficiaries of the program to channel the funds into a real estate investment trust (REIT) or KIK-DIRE. The market value of Indonesian REITs “would be promising for years to come after the easing on tax burden,” Muliaman told The Jakarta Post.
“It would be more enticing than the similar market in Singapore,” Muliaman said.
Bank Tabungan Negara, a government-accredited channel for repatriated funds under the tax amnesty, estimated that IDR5 trillion (USD378 million) to IDR10 trillion (USD757 million) could be invested in KIK-DIRE. Another property-related investment vehicle, KIK-EBA or mortgage-backed security, is expected to attract IDR5 trillion.
The bank expects to be a gateway for IDR50 trillion (USD3.8 billion) in repatriated funds. Thirty-percent could flow into KIK-DIRE and KIK-EBA.
More: Will Indonesia be SE Asia’s new tax-haven paradise?
Indonesia’s tax amnesty program took effect last month with the promise of penalty fees as low as 2 to 4 percent for natives who have declared capital stashed overseas. “This is the opportunity for you to go to heaven with only 2 percent (for tax penalty) and all of your sins have been deleted,” Indonesian Finance Minister Sri Mulyani Indrawati said on Friday.
She threatened affluent entrepreneurs in the country that she held video evidence of them confessing to tax evasion.
The Indonesian government is scrambling to hit a target of IDR1 quadrillion (USD75.7 trillion) in repatriated funds, out of IDR4 quadrillion (USD303 trillion) in declared taxpayers’ assets, by March. This week, the Indonesian government revealed that it had so far repatriated funds amounting to IDR1.51 trillion (USD114 million) and collected IDR947 billion (USD71.7 million) in penalty payments, which means that less than 1 percent of the targets have been met.
“Big players who have a great amount of assets have yet to participate in the amnesty program,” the Finance Ministry’s director general for taxation Ken Dwijugiasteadi said.
Read next: Lower transfer fees aim to reinvigorate Indonesian property market

Source : property-report.com
Read more…Invest in real estate, tax amnesty participants in Indonesia urged

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