Indonesia mulls establishing tax haven to keep business money at home

The Indonesian finance minister said Tuesday the government has considered setting up a tax haven island for local and foreign companies seeking offshore business as a bid to keep their funds in the country.

Minister Bambang Brodjonegoro told reporters in Jakarta that the plan would most likely become a follow-up move after Indonesia implements its Tax Amnesty Law which is currently still awaiting approval from the House of Representatives, which is scheduled to complete and pass the bill by July 28.

"A lot of Indonesian companies have activities abroad, which is fair ... But, we want their business to be based in Indonesia, because I think it's quite a waste to have tax amnesty, but business activities (mostly) remain outside of the country," the minister said.

Bambang said that his office is drawing up the concept of the offshore financial center for Indonesia, but also stressed that the government is still laser-focused on implementing the Tax Amnesty Law which is designed to get tax evaders to come clean, declare and repatriate their funds to the country.

The Indonesian government wants the law to apply for six months, but the house proposes an extension to a year in order to have more time to collect more funds.

Tax-to-GDP ratio in the Southeast Asia's biggest economy is among the lowest in the region at around 11 percent with only 10 million people fulfilling their tax obligations out of 27 million registered taxpayers. Endit