Indonesia tells Singapore not to hinder tax amnesty scheme

By Hidayat Setiaji and Gayatri Suroyo

JAKARTA (Reuters) - Indonesia's finance minister said on Friday she had asked neighbour Singapore not to hinder her government's tax amnesty scheme, and won assurances that Indonesians with assets in the city-state would not come under suspicion for participating.

Sri Mulyani Indrawati said she got the promise from Deputy Prime Minister Tharman Shanmugaratnam, who she called after Reuters reported on Thursday that private banks in Singapore were passing the names of clients joining the amnesty to a local police unit dealing with financial crime.

Launched in July, the tax amnesty is a top priority for President Joko Widodo, who wants the repatriated funds to help pay for Indonesia's large budget deficit and broaden the country's tax base. A large majority of the offshore assets declared so far were from Singapore.

"I have stressed to the Singapore government that the Tax Amnesty Law clearly mentions that Indonesian taxpayers have the right to join the amnesty programme and be pardoned for all their tax crimes and administrative sanctions," Finance Minister Sri Mulyani Indrawati told reporters.

"I will monitor this and all Indonesians that feel they have been hindered, we will follow up," said the former World Bank managing director.

The Monetary Authority of Singapore has confirmed it advised banks in Singapore to encourage clients to use tax amnesty programmes and that banks have to file a suspicious transaction report (STR) when handling tax amnesty cases.

MAS said participation in an amnesty in and of itself would not attract criminal investigation in Singapore.

Indrawati late Thursday told Indonesian media that the news on names being shared "could potentially disturb our taxpayers."

'PROTECTED BY LAW'

She said many in Indonesia asked her about Singapore's reporting requirement as some taxpayers became worried that when they join the amnesty to clear up their tax records, it could be seen as money laundering activity by Singapore authorities.

"There is no reason to be afraid. Joining the tax amnesty is a good action, it is legal and protected by law," Indrawati said on Friday.

Indonesians hold an estimated $200 billion in private banking assets in Singapore.

As of Friday, the government has collected 22.7 trillion rupiah ($1.73 billion) of tax amnesty revenue or almost 14 percent of its ambitious target of 165 trillion rupiah. Around 552.7 trillion rupiah of assets have been declared by more than 60,000 taxpayers.

As of Sept. 6 - the last breakdown available from Indonesia's finance ministry - Singapore accounted for 85.4 percent of assets declared outside Indonesia, followed by Australia with 6.7 percent, the United State 2.5 percent and Switzerland 1.8 percent.

($1 = 13,125 rupiah)

(Writing by Randy Fabi; Editing by Richard Borsuk and Andrew Heavens)