TAXES
LAW
6
KPMG Advisory Indonesia c/o Siddharta & Widjaja
T
o attract greater capital investment in Indonesia, in early
2018 the Government, throughMinistry of Finance PMK No.
35/PMK.010/2018 (“PMK 35”), issued a revised regulation
concerning its Tax Holiday Program. With the new policy the
Government aims to simplify the process and to broaden the
potential application. The revisions of the previous policy are:
1. The Applicant must be incorporated in Indonesia and
considering a new capital investment. Previously the
Applicant was required to be a new entity.
2. The pioneer industry groups which can participate in the Tax
Holiday Program have been expanded.
3. The government now also provides the opportunity to add
more pioneer industries to its list. If a Taxpayer considers its
business is a pioneer industry, it can apply to the Government
for approval.
4. PMK 35 now also allows businesses that have an economic
infrastructure cooperation with the Government and Business
Partnerships (KPBU/
Kerjasama Pemerintah dengan Badan
Usaha
) to participate in the Tax Holiday Program. The
previous regulation was limited to economic infrastructure
Jacob Zwaan, LL.M.(taxation)
Partner
+62 21 5799 5147
using schemes other than with the KPBU.
5. To participate in the Tax Holiday Program, the Applicant must
meet the Debt-to-Equity Ratio requirements in accordance
with Regulation PMK 169 and must not yet have been issued
a decision on the granting or a notification of rejection of the
Corporate Income Tax reduction by the Minister of Finance.
PMK 35 stipulates that successful Applicants will be entitled
to a tax facility reduction of 100% of the amount of corporate
tax payable. The duration of the tax facility depends on
the value of the investment and ranges from 5 years for
investments between IDR 500 million and 1 trillion, and 20
years for investments of IDR 30 trillion or more.
L
ate last year, Indonesia completed the last step in the
introduction of new transfer pricing regulations. While the
regulations covering the master file, local file and country
by country reporting were issued in 2016, the implementing
regulations for country by country (“CbyC”) reporting were not
completed until December 2017. For German headquartered
companies these regulations have limited impact. However, if
the HQ is in another country, the changes can be very relevant.
The most important features are:
— If a qualifying competent authority agreement is available and
the country of residence of the parent entity requires filing of
the CbyC report, the Indonesian subsidiary is only required to
file a notification.
— A list of qualifying agreements is published on the DGT’s
website and the list is still growing.
— The regulations do allow for surrogate filing.
— The threshold for filing the CbyC report is a consolidated
revenue of IDR 11 trillion for a domestic group or EUR 750
million for an overseas group, or the local threshold in the
country of residence of the parent entity.
— The filing deadline for financial year 2016 is 16 months after
the financial year end.
— For subsequent years, the deadline is 12 months after the
financial year end.
— The online notification report and the CbyC report must be
submitted online in XML, unless that is not possible.
— The deadline for US based groups was extended until 31 May
2018.
— The Directorate General of Taxation (“DGT”) issued a template
for the preparation of the CbyC report. There are not many
differences with internationally accepted standards, although
some parts have to be translated into the Indonesian
language.
The local file and master file regulations have remained
unchanged since they were first issued in 2016 and no additional
guidance has been issued.
Iwan Hoo, LL.M.(taxation)
Partner
+62 21 570 4888
Corporate Tax
Revised Tax Holiday Regulation More Attractive
for Potential Investors
Country-by-Country Reporting Implementation Published
Corporate Tax / Transfer Pricing
9
th
Edition | June 2018
