Indonesia introduced the tax amnesty from 1 June this year to encourage wealthy Indonesians to declare their riches and to repatriate funds ‘undeclared’ overseas. With Indonesian undeclared money accounting for an estimated US$200 billion of Singapore’s $470 billion assets beneath management in private banks, the impact could possess been considerable.

beneath the programme, companies and individuals are encouraged to handover details of previously undeclared assets and pay ‘redemption money’ in lieu of tax and any sanctions on overdue payments. Redemption money ranges from 2% to 10% of the assets, depending on when it is declared, and whether the money is being repatriated to Indonesia.

Assets returned must be kept in Indonesia for three years, in funds managed by appointed banks or invested in property. The government has been encouraging the latter, to hold money in the nation longer term.

Indonesian president Joko Widodo had hoped to see around $76bn returned from overseas through the amnesty. With an overall target of $300bn in declared assets, the government would also possess raised $12.4bn in redemption money.

However, early indications suggest that the actual return from the amnesty will not be as lofty as hoped. On 22 August finance minister Sri Mulyani said the tax amnesty assets declaration amounts to $3.4bn, of which $437 million was from overseas. The assets declaration from Singapore was $361m, with $81.8m repatriated.

It is too early to tell exactly what the figures will be, especially by the complete of September 2016 when the deadline for preferential redemption money rate of 2% and 4% will complete. From October to December the rate will increase to 3% and 6%.

The lower than expected response may also be partly due to some uncertainties beneath Indonesian law, which has left some investors worried about criminal liability if they declare entire of their assets. Once this is clarified, we are likely to see more public taking advantage of the amnesty.

numerous members of the public, and indeed the tax amnesty officials, may not fully discern the tax amnesty law and its implementation. The programme is not only a concern for the richest Indonesians but also the public in general, and reports possess suggested that there possess been a lot of unanswered calls to the short-staffed amnesty shout centre.  

It will seize some season for lofty net worth individuals to plan and restructure their assets and we may see the impact later as they do so. 

Nevertheless, the private banking industry in Singapore is currently feeling relieved and warily optimistic.

Valerie Wu is a tax expert