Jakarta Plans Tax Haven Near Singapore

Low tide on Bintan Island, Indonesia (Picture: Shutterstock)

Low tide on Bintan Island, Indonesia (Picture: Shutterstock)

Indonesia has defined two islands near Singapore as its own tax havens to prevent taxpayers from keeping their assets offshore – in Singapore, for example.

The two islands identified by Indonesia are Bintan and Rempang, according to a report on Monday in the Singaporean daily «Straits Times» and a story on «jakartaglobe.com» news site.

Both islands are located next to Batam and about an hour's ferry ride away from Singapore. Rempang is linked to Batam by a road bridge. Bintan, like Batam, is popular with Singapore holidaymakers.

Shell Companies

If the plan comes to fruition, Indonesian and foreign businesses will be able set up shell companies to keep their offshore investments, with low taxes to lure them, said Luhut Panjaitan, a coordinating maritime minister.

Having Indonesian tax havens will be useful for the country's tax amnesty, which officials believe will result in billions of dollars being moved back home, the «Straits Times» writes. But there is some concern that these funds may leave the country again when the obligatory three years of keeping the monies onshore expires, he was quoted as saying.

Indonesia introduced the tax amnesty last month, hoping to see the repatriation of some 1,000 trillion rupiah (S$103.5 billion).

Tax Haven in Malaysia Too

Malaysia has a tax haven on Labuan island, off Sabah, offering corporate tax rates as low as 3 percent and attracting both foreign and local businessmen to set up shell companies, «jakartaglobe.com» reported.

Labuan was set up as an international offshore financial and banking centre 26 years ago.

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