The scheme offers strong incentives for those with undeclared offshore assets to bring money back to Indonesia.
However, individuals will not be forced to repatriate their assets. As a result, an influx of funds from abroad is unlikely.
Despite this, bankers are hopeful that the move will still benefit the wealth management sector, which is struggling amid a slowing economy and the subsequent negative impact on the assets of their customers.
Small sector
Indonesia’s wealth management industry is small, with only about $20bn (£13.9bn, €17.8bn) in assets under management compared with $1.8trn in Singapore, the favoured destination for Indonesians moving money offshore, according to the Economist Intelligence Unit.
Some $200bn in Indonesian money is thought to be in Singapore.
Those who declare their offshore assets during the first month of the amnesty will be taxed at just 1%.
Previously, the government said that taxpayers disclosing their wealth in the first three months would be taxed at 2%, rising to 4% in the following three months, and up to 6% by the end of 2016, when the amnesty ends.
Indonesia’s top tax rate for individual income is currently 30% and the corporate rate is 25%.
Those coming forward will also avoid criminal prosecution.
Boost taxes
Indonesia’s finance ministry expects the amnesty to boost tax receipts by IDR60trn ($4.4bn) this year.
“Our money abroad is not just a little, but a lot, an extraordinarily large amount,” finance minister Bambang Brodjonegoro told reporters last week.
Even if little wealth is repatriated, the government hopes to expand its base of taxpayers. Only 10 million Indonesians now file an annual tax return, out of a population of 250 million.
Parliament will begin debating the draft law in coming weeks.
