The Indonesian government announces that it will immediately propose and discuss the draft Tax Amnesty Law with the Parliaments. The legislation shall be effective in the 2016 fiscal year. The tax amnesty is the tax policy which grants the remission of taxes (including tax interest and sanction) to certain tax payers in certain periods, which related to previous tax obligation.

Indonesia indeed depends on a tax amnesty program to boost state revenues. Due to recent decreasing of the oil prices and lower commodity prices, the government relies heavily on the tax revenue as a source of income to finance the state development and spending.

The Coordinating Minister for Economic Mr. Darmin Nasution said tax rates of the tax amnesty have already proposed, but the exact value have not been decided. The tax amnesty rate may vary from 2 percent to 4 percent to 6 percent. It will be depending on the time of application. The other point of tax amnesty is no repatriation obligation of assets. However, if intend to repatriate the assets, the taxpayer will be given incentives in the form of tax reduction on time deposits in the rupiah and foreign currency. 1)

The tax amnesty was implemented in 1964 and 1984 which was regulated by Presidential Decree. However, the tax amnesty effectiveness was very low in view of the low participation of tax payers.

This policy is expected to increase the tax revenues from the funds which reside outside Indonesia. Potential fund flows estimated to range from US $20-40 billion.

When the tax amnesty program is implemented successfully, the Government has several advantages, among others, the government can focus on efforts to combat the corruption. Likewise with the implemented tax amnesty, the asset recovery will be easier because it does not need to do investigation, prosecution and other legal proceedings to take over the assets related to the corruption crime.

The Asset recovery is a comparison between the amount of loss of state indicted by the confiscation of assets or return on assets from corruption. During this time the percentage of asset recovery still relatively small. Furthermore, the Asset recovery percentage is referred for determination of tax amnesty rate.