Indonesia says it is investigating reports that US$1.4 billion held by Standard Chartered in Guernsey, mainly on behalf of Indonesian clients, was transferred to Singapore just before the UK Channel Island changed its tax transparency regulations.
The Monetary Authority of Singapore and Guernsey’s Financial Services Commission were reportedly studying the movement of assets in late 2015, before Guernsey adopted a global framework on the exchange of tax data.
Indonesia’s Finance Ministry received data on the fund transfer for tax compliance purposes and found it involved 81 citizens, without any military, police, law enforcement or civil servants involved, director-general for taxation Ken Dwijugiasteadi told the media in Jakarta. The authorities are co-ordinating with Standard Chartered and expects to complete the probe by the end of this month.
Under the rules, countries automatically share annual reports on accounts belonging to citizens subject to taxes in each nation. Britain, Guernsey and Singapore all signed up.
An Indonesian source told Reuters that the authorities suspected links between some of the private banking clients and the archipelago’s military.
“This was not a transfer by one Indonesian citizen but by many customers. We are now checking their annual tax reports, as well as their report of assets, for those who participated in [Indonesia’s 2016] tax amnesty,” said Hestu Yoga Saksama of the Indonesian tax authorities.
“If those assets are reported in annual reports or declared during the tax amnesty, it surely means there are no problems. But if they were not, we are going to follow up.”
Jakarta launched a tax amnesty last year to improve compliance and to persuade taxpayers to bring back billions being held overseas, with most of the offshore assets declared coming from Singapore.
The investigation comes as European and Asian regulators reportedly probe Standard Chartered over the role staff may have played in transferring client assets from Guernsey to Singapore before new tax transparency rules were introduced.
Singapore and Indonesia said in July they were ready to share financial data automatically for tax purposes.
Standard Chartered closed down its operations on Guernsey last year.
Guernsey is a quaint island between Britain and France. Picture credit: Flickr