Comparing the Results of the First and Second Tax Amnesty Programs

The Indonesian government and the House of Representatives (DPR) are considering a third tax amnesty program, or voluntary disclosure program (PPS).

According to *Katadata*, this plan, also known as a *tax amnesty*, is included in the minutes of a meeting of the National Legislation Program Working Committee (Panja Prolegnas) held by the DPR's Legislation Body (Baleg) on Monday, November 18, 2024. The meeting's results show that this tax amnesty program is on the draft list of proposed priority National Legislation Program (Prolegnas) bills for 2025.

So, what were the results of the previous tax amnesties (I and II)?

Tax amnesty I ran from 2016-2017. Based on various sources compiled by *Databoks*, a total of 956,793 taxpayers, both individuals and corporations, participated. The value of assets declared amounted to Rp4,854.63 trillion.

Domestic asset declarations totaled Rp3,676 trillion, while foreign asset declarations amounted to Rp1,031 trillion. These figures fall significantly short of the declared targets of Rp4,000 trillion each.

Repatriated taxes amounted to only Rp147 trillion, representing just 14.7% of the Rp1,000 trillion target.

The government received Rp114.02 trillion in tax penalties, equivalent to 69% of the Rp165 trillion target.

Tax amnesty II was held from January 1 to June 30, 2022, a shorter duration than amnesty I.

The Ministry of Finance (Kemenkeu) reported that 247,918 taxpayers participated in amnesty II. The value of declared assets totaled Rp594.82 trillion.

Domestic declarations amounted to Rp498.88 trillion and foreign declarations to Rp59.1 trillion. Repatriated assets totaled Rp13.7 trillion.

Tax penalties (PPh) paid amounted to Rp61.01 trillion, comprising Rp32.91 trillion under policy I and Rp28.1 trillion under policy II.

(See also: [Last Month of Tax Amnesty, Participant Contributions Increase Drastically](https://databoks.katadata.co.id/ekonomi-makro/statistik/040a6616912891d/bulan-terakhir-pengampunan-pajak-setoran-peserta-naik-drastis))

Economists' Criticism

*Katadata* reports that the planned tax amnesty has been criticized by several economists, as it could increase tax evasion by wealthy individuals and large corporations.

Bhima Yudhistira, Executive Director of the Center of Economic and Law Studies (Celios), considers a third tax amnesty a reckless decision if the government aims to increase tax revenue.

“The tax ratio has demonstrably not increased after tax amnesties I and II. What is the impact of a tax amnesty? Clearly, there is none,” Bhima told *Katadata* on Tuesday, November 19, 2024.

According to Bhima, frequent tax amnesties could decrease tax compliance among wealthy individuals and large corporations. This leads tax evaders to assume that after tax amnesty III, similar programs will follow.

“This presents a significant moral hazard. Instead of pursuing tax compliance and matching asset data from previous tax amnesties, they are instead implementing a tax amnesty III,” said Bhima.

Businesses have already benefited from continuously decreasing corporate income tax (PPh) rates. Furthermore, next year, the corporate PPh rate will decrease from 22% to 20%.

On the other hand, the increase in value-added tax (PPN) to 12% will weaken the purchasing power of the lower and middle classes, and also negatively impact businesses.

Moreover, Bhima sees the impact of the PPN increase as potentially causing mass layoffs in the retail and manufacturing sectors.

“Where is the tax justice?” asked Bhima.

(See also: [Main Tax Contributions October 2024, Domestic VAT Highest](https://databoks.katadata.co.id/ekonomi-makro/statistik/673ae8ebd328a/kontribusi-pajak-utama-oktober-2024-ppn-dalam-negeri-tertinggi))