Fuad Welcomes Tax Haven Transparency

Jakarta Globe, By Dion Bisara, June 17, 2013

Fuad Rahmany, director general of tax in the Finance Ministry, is
skeptical about tax havens giving up their privileges. (GA Photo/Defrizal)

An Indonesian official applauded tax haven countries joining an agreement on international tax transparency. But he said developed countries needed to do more to altogether eliminate the unfair tax advantages some jurisdictions enjoy.

Fuad Rahmany, director general of tax in the Finance Ministry, said the convention made it easier for his office to search for offshore accounts belonging to Indonesian nationals.

“There is progress because of tax haven jurisdictions wanting to join the convention,” Fuad Rahmany told the Jakarta Globe on Sunday.

Fuad’s comment came after ten territories and self-governing regions tied to Great Britain agreed on Saturday to sign a convention known as the Mutual Assistance in Tax Matters, to which more that 50 countries have acceded, including Indonesia.

The cooperation of Bermuda, the British Virgin Islands, the Cayman Islands, Gibraltar, Anguilla, Montserrat, the Turks and Caicos Islands, Jersey, Guernsey and the Isle of Man was secured as part of British Prime Minister David Cameron’s push to close global tax loopholes ahead of the G8 summit in Northern Ireland from June 17-18.

Still, Fuad was a little sceptical that the offshore investment destinations would give up their privileges so easily.

“What I really want to know is that those jurisdiction really have good intentions in signing the agreement, because [offshore tax advantages] have [thus far] been their only selling point,” Fuad said.

“For me, the most important thing is in the implementation,” he said.

“It would be meaningless if [their intention is] to release so little information that we cannot draw any conclusions from it.”

Fuad said he wants developed countries to make a concerted effort to eliminate tax abuses entirely. “I want them closed down. The world will be fairer and more transparent if such jurisdictions, where paper companies are listed, are gone,” he said.

Developed jointly by the Council of Europe and the Organization of Economic Cooperation and Development in the beginning in 1988, the convention is designed to help tax authorities tackle tax evasion and avoidance, while respecting the fundamental rights of taxpayers.

The cooperation includes automatic exchange of information, simultaneous tax examinations and international assistance in the collection of tax debts.

Indonesia signed the convention in 2011, but has yet to ratify it.

This year the Indonesian government has seen tax revenues fall due to plummeting commodity prices.

The tax revenue target in the government’s revised 2013 budget was adjusted downward to Rp 1,148 trillion ($116 million) from Rp 1,193 trillion originally.

Fuad said it was likely that Indonesian companies were among those with funds stashed in tax havens — money the government needs.

Additional reporting by Reuters

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