||Nina Cornelia Santoso
Following Indonesia's signing of the Convention on Mutual
Administrative Assistance in Tax Matters (MCAA) on the
automatic exchange of financial account information (AEOI) in
2011, the country is expected to undertake the first
information exchange by September 2018. As a consequence, the
Indonesian tax authority will receive taxation information of
Indonesian citizens who have placed their assets in the partner
countries/signatory countries to the MCAA, and vice versa. The
AEOI is anticipated to persuade Indonesian citizens to
repatriate their assets.
In preparation for 2018, the Indonesian government has
developed and enacted several domestic regulations. The
Ministry of Finance (MoF) issued MoF Regulation No.
60/PMK.03/2014, as amended by No. 125/PMK.010/2015, concerning
procedures of exchange of information, which stipulates general
matters relating to the AEOI, including the types of exchange
of information. Separately, the Financial Services Authority
(locally known as Otoritas Jasa Keuangan, or OJK)
issued OJK Regulation No. 25/POJK.03/2015 concerning the
submission of information on foreign customers relating to
taxation to partner countries or partner jurisdictions (OJK
Regulation No. 25/2015), which requires financial institutions
to submit reports of taxation information of foreign banking
customers to the Indonesian tax authority. To date, several
financial institutions have started implementing these rules in
relation to their customers.
To further implement the AEOI and the OJK Regulation No.
25/2015, a Government Regulation in Lieu of Law (Peraturan
Pemerintah Pengganti Undang-undang) and an OJK circular
letter are being prepared. The OJK circular letter will
regulate the procedures of due diligence of foreign banking
customers and is likely to be issued in April 2017. In
addition, an electronic system application known as the
"Disclosure of Bank Secrecy Request Application" (Aplikasi
Usulan Buka Rahasia Bank, or Akasia) has been prepared,
which will work with a system application prepared by OJK known
as the "Disclosure of Bank Secrecy Application" (Aplikasi
Buka Rahasia Bank, or Akrab). OJK has also prepared a
reporting system called the "Foreign Customer Submission
System" (Sistem Pelaporan Nasabah Asing, or SiPINA).
Collectively, these systems will coordinate data disclosure
requests and reporting between the Indonesian tax authority,
the MoF, and the OJK. With all these preparations, Indonesia
intends be fully prepared and to comply with all requirements
of the AEOI, so that all partner countries/signatory countries
to the MCAA will be willing to cooperate with Indonesia. This
includes Singapore, which has previously refused to exchange
financial information with Indonesia.
Despite this, it is also important to note that the
Indonesian tax authority will only have automatic access to
taxation information of foreign citizens. Access to taxation
information of Indonesian taxpayers is only available in the
event that such taxpayers are undergoing a tax investigation,
collection, or objection. The granting of access must also be
based on a written request from the MoF to the OJK.
On a separate occasion, the tax authority revealed its plan
to revise the controlled foreign companies (CFC) rules by
enlarging the definition of a CFC (to capture passive income
other than dividends and to lower the ownership percentage in
an offshore entity) and include trust structures and indirect
control in the revised regulation.
Freddy Karyadi (firstname.lastname@example.org)
and Nina Cornelia Santoso (email@example.com),
Ali Budiardjo, Nugroho, Reksodiputro, Law
Tel: +62 21 250 5125