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Indonesians Hiding Assets Abroad

Indonesians Who Hide Assets Abroad Face Punishment

The Directorate General of Taxation in Indonesia have decided to investigate Indonesian assets that are not reported through the annual tax return form (SPT), and they are preparing punishment for non-compliant taxpayers, according to Finance Minister Sri Mulyani Indrawati.

She said the first step would be for the Directorate General of Taxation to check the status of any Indonesian wealth parked overseas.

“Currently, we are in the process of studying the data,” the minister said.

She was referring to data indicating that Indonesians have parked Rp 1.3 quadrillion (US$91.3 billion) worth of assets in a number of countries, data obtained because of cooperation among countries through the Automatic Exchange of Information (AEOI) in 2018.

Through the cooperation, the tax office has received reports from 66 countries.

Tax research and training services analyst Bawono Kristiaji said he believed the tax office could use AEOI data to force taxpayers to comply with the regulation.

“The [AEOI] data could be used to monitor the compliance of the taxpayers,” Bawono added.

He said one of the reasons for the low tax ratio in the country was that the government had no data about Indonesian taxpayers’ assets abroad.

How to Invest Money Safely Overseas

Indonesians and other nationalities can safely invest in monies overseas through an insurance contract. An insurance contract can be set up that can invest monies via an “insurance wrapper”. Monies sent into the insurance wrapper can then be reinvested into bank accounts or the stock market via professionally managed funds.

An investor may choose from funds, similar to mutual funds, offered by a life insurance company. Investments are usually made through a lump sum amount, for example investing $200,000 to $5,000,0000. Investors can also add monies in on a regular basis, for example, adding extra cash in monthly or annually.

The insurance contract is usually a whole of life insurance contract and you can choose who the beneficiaries are. For example, you can decide to have the full amount paid out upon death to your spouse or any chosen partner or heir of your choice. There may also be tax advantages of investing via an insurance contract rather than investing directly into a stock brokerage account.

Key Features of Investing Assets into an Insurance Contract

  • Choice of 7 differentcurrencies including Pounds (GBP), Euros (EUR), United States dollars (USD) Swiss francs (CHF), Australian dollars (AUD), Hong Kong dollars (HKD) or Japanese yen (JPY).
  • You can opt for a capital redemption or life assurance basis.
  • You can invest from GBP 100,000 (or the currency equivalent) with the option to increase later.
  • Professionally managed investment portfolio with billions under management.
  • Easily managed in one place. High level of security. No need to worry about loss of your phone or laptop.
  • You can access your plan at any time and take regular or one-off withdrawals.

Example Portfolio

  • Money is moved from an overseas bank into an insurance wrapper, e.g. $100,000 is transferred from a bank in Indonesia to an insurance wrapper in the Isle of Man.
  • The money is then reinvested through professionally managed funds via large investment fund houses such as Black Rock, Morgan Stanley and Vanguard.
  • There may be tax advantages of leaving your money invested in the insurance wrapper.
  • Upon death, 100% is paid out in cash to anyone you name in the contract.
  • In ten years time, you can cash in the entire bond or decide to have an annual income paid out from the wrapper every year for the next 20 years.

How to Set Up an Offshore Insurance Wrapper to Protect Assets

Please contact a financial planner for more information and to receive brochures explaining the plans.

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