PHNOM PENH – Tax And Spend has rarely been part of the Southeast Asian governance lexicon. And judging by the region’s dismal tax-to-gross domestic product (GDP) ratios, it doesn’t look like that will be changing anytime soon. Newly published revenue statistics compiled by the Paris-based Organisation for Economic Co-operation and Development (OECD) show that the five biggest Southeast Asian economies have ratios of half or less than the 2017 OECD average of 34.2%, though most countries in the region showed small increases in revenues compared with the previous year. The OECD defines the tax-to-GDP ratio as “total tax revenue, including social security contributions, as a percentage of GDP”. While more prosperous countries in Southeast Asia’s vicinity such as Australia, Japan and New Zealand all come in around the 30% mark, Southeast Asia’s own numbers were much lower, with Indonesia at 11.5%, Malaysia on 13.6 and Singapore only slightly above on 14.1. This last number in particular seems surprisingly low given that Singapore’s economy more resembles higher-tax Western counterparts than its neighbours in Southeast Asia.
JAKARTA — 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. The move 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. “This regulation is for special purpose vehicles […] that don’t actively run businesses,” said Astera Primanto Bhakti, a Finance Ministry official. The tax office estimates that there are at least 2,500 offshore companies whose assets actually belong to Indonesians, but which were not declared as such. The majority of these companies were allegedly established to evade Indonesia’s tax laws.