Banks want tax system to respect banking secrecy
Urip Hudiono, The Jakarta Post/Jakarta
The banking sector has voiced its opposition to provisions in the proposed tax law amendments that would give the tax office the power to directly require banks to disclose information on their customers' accounts for investigative purposes, arguing that this would hurt the industry's essential nature as a "business based on trust".
"Such stipulations would, firstly, violate the principle of banking secrecy enshrined in the Banking Law (No. 10/1998)," said Association of State Banks (Himbara) chairman Sigit Pramono on Wednesday during a meeting with the House of Representatives' committee deliberating the proposed amendments to the tax legislation.
Sigit, the president director of Bank Negara Indonesia (BNI), suggested that these provisions be reviewed and brought into line with the Banking Law.
"The banks might consider accepting the stipulations if the tax office's request for disclosure was forwarded to and approved by the central bank," he said.
Under the current Banking Law, banks must keep confidential all information on a customer's account, particularly the name of the account holder and the account balance. Such information may only be disclosed based upon a directive from Bank Indonesia (BI).
For investigative purposes, however, the Ministry of Finance may submit a request to BI for a disclosure order.
In the bill amending the prevailing law on general taxation arrangements and procedures, the tax office will be allowed to directly require banks to disclose such information based on the argument that the current procedures as too cumbersome.
Several bankers had previously voiced concerns over the proposed arrangements, arguing that they would violate banking secrecy. Analysts are also concerned about the possible misuse of such information given the widespread doubts about the integrity of tax officials.
Himbara also opposed provisions in the draft tax law amendments requiring the accounts of corporate taxpayers to be inspected by auditors appointed by the finance ministry, given the possible effects on publicly listed banks.
"This would violate the Capital Markets Law, which requires that the accounts of publicly listed companies be audited by public accountants approved by the Capital Market Supervisory Agency (Bapepam)," Sigit said, suggesting that this would also need to be reviewed.
On the proposed amendments to the current Income Tax Law, Sigit suggested that the procedures and rates of a number of taxes -- such as on interest on time deposits, savings accounts and banking transactions -- be defined more clearly.
"We would also suggest that taxes on transactions be applied only once, preferably on a cumulative basis at the end of the financial year, to make the process simpler," he said.
Himbara consists of five state banks, including three of the country's largest lenders by assets: Bank Mandiri, BNI and Bank Rakyat Indonesia (BRI).
Association of National Banks (Perbanas) chairman Agus Martowardojo said that banks were also concerned with provisions in the draft amendments that give the tax office the right to freeze a taxpayer's account based only on "alleged indications" of attempts to evade tax.
"The stipulation should only be applied based on sound evidence of an attempt to evade tax, not just indications," said Agus, the president of Bank Mandiri.
Perbanas also suggested the scrapping altogether of a proposed provision requiring taxpayers to report their daily expenditure as part of the self-assessment process as such a requirement would only make the taxation system more complicated.
Perbanas has 77 member banks, comprising the members of Himbara and private sector banks.