* Indonesia and Hong Kong signed agreement on Friday
* Indonesia says to use info to complement its tax database
* HK has committed to OECD's automatic exchange of
(Adds details of the agreement, background)
By Eveline Danubrata
JAKARTA, June 16 Indonesia and Hong Kong have
agreed to share financial information that will give the
Indonesian tax office access to data on taxpayers who have
accounts in the wealth management hub, Indonesia's finance
ministry said on Friday.
The government of Southeast Asia's biggest economy, which is
eager to ramp up tax collection to narrow its budget deficit and
fund infrastructure expansion, launched a tax amnesty scheme
last year to bring back billions of dollars stashed abroad.
Hong Kong's government has come under pressure after the
so-called Panama Papers scandal last year, which showed that the
Chinese territory was the most active centre in the world for
the creation of shell companies.
These shell companies have many legitimate purposes but can
also be used to hide assets and evade taxes.
Indonesia's Director-General of Taxes and Hong Kong's
Commissioner of Inland Revenue Department had signed a
"Bilateral Competent Authority Agreement", a statement issued by
the Indonesian government said.
Indonesia will use the financial information obtained from
Hong Kong to complement its tax database, "so hopefully this
will encourage Indonesian taxpayers to voluntarily fulfill their
tax obligations," the statement said.
The move is in line with a global effort to boost tax
transparency. An increasing number of countries have committed
to the automatic exchange of information (AEOI) led by the
Organisation for Economic Co-operation and Development.
Based on the result of Indonesia's tax amnesty program, Hong
Kong was the third-biggest source of repatriated funds at 16.31
trillion rupiah ($1.23 billion). Indonesians also declared 58.15
trillion rupiah worth of assets in the Asian financial centre.
In 2014, Hong Kong stated its commitment to implement the
AEOI on a reciprocal basis with "appropriate partners" and said
it aims to start exchanging information by 2018.
($1 = 13,298.00 rupiah)
(Reporting by Eveline Danubrata; Additional reporting by
Nilufar Rizki; Editing by Christian Schmollinger and Vyas Mohan)