Tax Amnesty and Asset Repatriation in Indonesia

The government of Indonesia released a tax amnesty policy from July 2016 until March 2017 to eliminate tax penalties done by Indonesian tax residents with respect to unreported assets and investment. The policy also has an option to repatriate assets to be invested in domestic market for at least 3 years. Using a theoretical model, empirical estimation, and comparison with realization data, this thesis will analyze the impact of tax amnesty policy and also the asset repatriation policy for the benefit of Indonesian economy. It is found that taxpayers decide to participate in the tax amnesty policy if the cost of the amnesty which comes from redemption money is lower than the cost of evading money in foreign countries. From the empirical analysis and realization data, asset repatriation from tax amnesty policy still contributes positive gain to investment condition in Indonesia if those repatriated assets are invested through direct investment. Even though the tax amnesty policy is also proposed to increase Indonesian economic growth through repatriated assets invested in the domestic market, apparently the policy is mostly used for domestic residents who evade tax payment in the past. Master