The Finance Ministry published on Tuesday evening Finance Ministerial Regulation (PMK) No. 127/2016 that lays out amnesty procedures for taxpayers that own “indirect assets through special purpose vehicles”.

It is the fifth PMK issued so far under the tax amnesty program.

According to the regulation, an SPV is a firm established solely to serve a specific purpose in line with the founder’s interests — such as a purchase or investment financing — and a firm that does not conduct active business activities.

The regulation stipulates that taxpayers who own assets in the name of an SPV must declare them in a statement. They will then face two options: dissolve the SPV or transfer their rights on the assets.

The asset rights can be transferred to individual taxpayers themselves or to an Indonesian legal entity in the form of a limited liability company.

Should the taxpayers bring back their assets from overseas or if the assets are already within Indonesian territory, penalty rates of 2 percent to 5 percent will be imposed upon them.

However, if they decide to keep the assets outside Indonesia, the same rate of 4 percent to 10 percent will be applied. The penalty rates for both schemes are the same as the ones charged on other taxpayers who do not own SPVs.

The regulation also stipulates that if the rights transfer is carried out before Dec. 31, 2017, the assets will be exempted from income tax. Conversely, failure to transfer the rights before the deadline will result in the imposition of income tax.

Taxation Directorate General spokesman Hestu Yoga Saksama said the PMK was issued to respond to high demand from businesspeople for such a regulation.

President Joko “Jokowi” Widodo, Coordinating Economic Minister Darmin Nasution and Finance Minister Sri Mulyani Indrawati have all claimed that the government would prioritize targeting wealthy Indonesians and assets repatriation instead of small taxpayers.

Indonesian Chamber of Commerce and Industry (Kadin) advisory board member Chris Kanter acknowledged that many businesspeople—in possession of hefty funds—used SPVs to keep their assets.

However, he said the regulation’s timing was a little too late.

“Many taxpayers are only beginning to notice the existence of this regulation. They will need time to prepare the requirements before eventually applying for the amnesty. The time provided until Sept. 30 will not be enough,” he said.

Sept. 30 is the deadline set for the first phase of the tax amnesty program, during which the penalty rates are set the lowest. The rates will gradually increase in the second phase that ends in December and in the last phase that ends in March 2017.

The government expects to see the highest number of tax amnesty participants in the first phase.

Center for Indonesia Taxation Analysis (CITA) executive director Yustinus Prastowo voiced a similar view to Chris, saying the regulation should have been issued sooner.

“September is just a month away. The government may need to issue a Perppu [regulation in lieu of law] to extend the first amnesty period and give more of a chance for those who want to participate.”

Despite kicking off on July 1, the amnesty has so far progressed at a snail’s pace. As of Wednesday, penalty payments reached just 1.9 percent of the target, while asset repatriation stood at 1 percent of the target.

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