The Indonesian government is requiring individuals or entities that want to take part in its new tax amnesty program to dissolve any shell companies they own overseas.
Under tax amnesty program, the Indonesian government will impose a 2-5 percent tax for assets brought back by March 2017 and need to be kept in Indonesia for the next three years in funds managed by appointed banks.
The assets that have been brought back can be invested in government bonds, while repatriated funds will be allowed to be invested in instruments like government issued securities, stocks, bonds and mutual funds issued by private companies, as well as the direct purchase of properties.
The government's request to dissolve shell companies comes as the central bank warned that assets declared and repatriated under the amnesty will fall short of targets. "The new finance ministry decree, containing the latest technical details of the tax amnesty law, says that if the person only partially owns an overseas shell company then they must relinquish their stake in the relevant country. They are also given an option to relocate the company to Indonesia and register it as a local entity," Nikkei Asian Review reported.
"This regulation is for special purpose vehicles [...] that don't actively run businesses," said Astera Primanto Bhakti, a Finance Ministry official.
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