The president can issue a government regulation in times of emergency. It becomes effective immediately, although parliament must debate and vote on the regulation during its next sitting to turn it into law. If parliament votes it down, the regulation is repealed.
The government considered it "very urgent" for the tax office to get wider access to financial data, according to the regulation. Failure to meet AEOI commitments could lead to significant losses and disrupt stability in Southeast Asia's largest economy, it said. The regulation calls on banks, insurance companies and other financial institutions to report client information - including cash balances and financial gains from assets - as required under international standards, and for the tax office to share the information with authorities in other countries.
The tax office can also ask for financial institutions to share information for tax collection purposes. Previously, under laws protecting banks and other financial institutions, the tax office had to file a request to the Financial Services Authority (OJK) to get access to a tax payer's accounts, and only for the purpose of an investigation. The process could take more than six months and in some cases allow people to cover up possible evidence of tax avoidance, tax officers have said. Under the new rules, financial institutions still have to file their report through OJK and the regulator will then give the data to the tax office within a certain time period. President Widodo has made reforming the country's tax system one of his administration's top priorities and last year launched a tax amnesty.
The nine-month amnesty, which ended in March, generated 135 trillion rupiah ($10.16 billion) of additional tax revenue to the government, equivalent to 1.08 percent of GDP.
Almost 1 million tax payers joined the programme, declaring 4,881 trillion rupiah of previously concealed assets, including offshore assets that were mostly kept in Singapore.
Copyright Reuters, 2017