Indonesia and Singapore are at the forefront in the fight against tax evasion across the country. In December 2014, a meeting was held between Minister of Finance of the Republic of Indonesia, Bambang P.S. Brodjonegoro and Finance Minister of Singapore, Mr. Tharman Shanmugaratnam to discuss initiatives on enhancing bilateral cooperation between Indonesia and Singapore in respect of information exchange for tax purposes.
The information exchange bilateral cooperation between Indonesia and Singapore has been well established since the signing of the Double Taxation Avoidance Agreement (P3B) Indonesia-Singapore which is effective from January 1, 1992. To improve the quality of information exchange on request, the two countries have also committed to the information exchange in accordance with international standards. Moreover, both countries have agreed to exchange any data and information related to taxes, for tax compliance governance. In addition, the two countries have signed the Convention on Joint Administrative Assistance in the Field of Taxation (Convention on Mutual Administrative Assistance in Taxation), a standard in the implementation of tax cooperation between two countries.
Voluminous exchange of information between the two countries has been conducted through the mechanism of information exchange on request. Consequently, many tax compliance examined and tax revenue increases. Minister of Finance of both countries agreed to disclose more information when exchanging information on request, additional information are such as all assets owned by residents of both countries and financial accounts which are deliberately hidden to evade tax.
In order to further enhance the information exchange bilateral cooperation, initiatives have been taken to expedite the movement of information from one country to another. Indonesia and Malaysia have committed to exchange information automatically to complete the mechanism for information exchange on request. In this respect, Indonesia and Singapore have committed to immediately revamp domestic legislations to support the automatic information exchange between the two countries. This commitment is in line with a Communiqué released in November 2013 by the leaders of G20 Member States, including President Joko Widodo, in Brisbane Summit. The Communiqué supports global standard automatic information exchange (Common Reporting Standard) with the principle of reciprocity. This standard aims at ensuring justice for international tax system and securing the revenue base for each country. The automatic exchange of information between these countries is expected to begin in 2017 or 2018.
With the above initiatives, tax avoidance is discouraged and tax revenues of Indonesia and Singapore will increase accordingly.Back to Articles
The information provided in this article is for general information purposes only. The information is not intended to be comprehensive or to include advice on which you may rely. You should always consult a suitably qualified professional on any specific matter.
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