22 Aug 2016
INDONESIA: Likely Sites of Domestic Tax Havens Announced
Two islands have been designated as the likely sites for the country’s first officially-sanctioned tax havens. Should the initiative be implemented, Bintan and Rempang, two popular tourist destinations, will be established as Offshore Financial Centres (OFC). The two will function as low-tax jurisdictions, allowing both citizens and overseas investors to conduct offshore trade via legitimately-established shell companies.
The move is part of the government’s wider initiative to retain funds within Indonesia, rather than seeing them wooed away by the lower tax regimes of neighbouring countries, most notably Singapore. A nine-month tax amnesty is currently in place, with the government hoping to see some US$4 billion of overseas-held funds repatriated before the end of March 2017.
The establishment of the OFCs is seen as a key means of retaining those funds in the country following the end of the amnesty period and the expiration of the statutory three-year term during which any repatriated funds must be held in a designated Indonesian bank. No statement has yet been released as to the likely commencement date of the OFCs.