The Indonesian Parliament has approved a law that allows tax authorities to access information in accounts held at various financial institutions, such as banks, insurance companies, and asset management firms.
President Joko Widodo signed the proposal in May, but it needed approval from parliament for it to become fully effective as a law.
Under the new law, insurers, as well as other financial institutions, must report client information to the Directorate General of Taxes (DJP), reports
Reuters. This measure aims to combat tax evasion and money laundering.
In turn, the DJP will share the information with authorities in other countries as part of a multinational initiative of Automatic Exchange of Information led by the Organization for Economic Cooperation and Development (OECD).
By being part of the initiative, Indonesia is closing in on catching tens of billions of dollars in assets its citizens have stashed abroad to avoid paying taxes in their home country. The Southeast Asian country is seeking to increase its tax collection to fund its infrastructure and social service programs, which has been facing a fiscal shortfall.
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