Photo from Jakarta Post

According to the executive director of Center for Indonesia Taxation Analysis (CITA) Yustinus Prastowo, several Singapore-based Indonesian businessmen revealed that the Singapore government has hired private bankers with tariff difference of 2% to prevent them from returning billions of assets stashed in Singapore.

Indonesia has recently in July implemented a tax amnesty program allowing Indonesian businessmen to repatriate their wealth – an estimated S$200 billion in total – back to Indonesia with only a 4% tax. According to the Indonesian authorities, the Singapore government-hired private bankers offer a variety of schemes in response to the Indonesian government program like a 2% tax rebate, zero percent interest on loans to Indonesian businesspeople and waivers on declaration fees, so to retain the funds in Singapore. The Indonesian authorities however did not reveal which Singapore bank are dangling the offers.

The Singapore government denied the allegation with the Monetary Authority of Singapore claiming innocence and even declaring that they are happy to work with foreign countries to assist with cross-border tax evasion. Singapore Law Minister K Shanmugam took offense of Indonesia’s Finance Minister’s comment that Singapore is a small country, and threatened Indonesia not to taunt Singapore.

Singapore’s economy is currently in a recession, and a loss of Indonesian funds will bring key Singapore banks like DBS, UOB and OCBC to their knees. Singapore is infamous for being a tax haven and money laundering hub, especially since the development of the two casinos.