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UPDATE 1-Indonesian court rules tax amnesty law is constitutional
December 14, 2016 / 9:56 AM / 10 months ago

UPDATE 1-Indonesian court rules tax amnesty law is constitutional

* Four petitions challenged the law behind the amnesty

* There are ‘urgent reasons’ for the amnesty, court says

* Finmin: Ruling should erase all taxpayer doubts (Adds details, finmin’s comment)

By Hidayat Setiaji

JAKARTA, Dec 14 (Reuters) - Indonesia’s Constitutional Court on Wednesday rejected petitions to declare illegal the law backing the government’s tax amnesty, ending a challenge to the government’s flagship programme to boost revenue.

The amnesty, which was launched in July and lasts until March, is President Joko Widodo’s top priority to get taxpayers to repatriate undeclared overseas assets and to help cover the government’s large budget deficit.

The programme offers citizens low penalty rates for declaring assets obtained with untaxed income.

The court rejected arguments by four groups of plaintiffs who contended the law hurt efforts to fight money laundering and corruption.

The panel of judges said the amnesty is needed to support Indonesia’s economy at a time when “government revenue has declined drastically”.

“There are urgent reasons for the implementation of the tax amnesty law. For the state to relinquish its right to collect taxes owed to it is not unconstitutional,” Justice Suhartoyo said.

A Constitutional Court ruling is final and binding.

Finance Minister Sri Mulyani Indrawati, who attended Wednesday’s court reading of the verdict, told reporters afterwards: “I hope the court ruling will create legal certainty for all taxpayers who participated in the tax amnesty programme. I hope this erases all taxpayers’ doubts.”

Despite the legal challenge, the government continued with the amnesty programme. So far, it has drawn nearly 500,000 participants who declared 4,008 trillion rupiah ($301.7 billion) of previously untaxed assets, according to government statistics.

Prior to the Sept. 30 deadline for getting the best terms, some of Indonesia’s wealthiest individuals went to tax offices to sign up for amnesty participation.

$1 = 13,285 rupiah Reporting by Hidayat Setiaji; Writing by Gayatri Suroyo; Editing by Richard Borsuk

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