Indonesia’s road to 2018 and the AEOI

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Indonesia’s road to 2018 and the AEOI

intl-updates-small.jpg

Indonesia's plans to exchange tax information with tax authorities worldwide from September 2018 could push taxpayers to repatriate their assets.

Karyadi-Freddy
santoso.jpg

Freddy Karyadi

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 (fkaryadi@abnrlaw.com) and Nina Cornelia Santoso (nsantoso@abnrlaw.com), Jakarta

Ali Budiardjo, Nugroho, Reksodiputro, Law Offices

Tel: +62 21 250 5125

Website: www.abnrlaw.com

more across site & shared bottom lb ros

More from across our site

The EU defended its ‘sovereign right’ to impose the tax in the face of US tariff threats; in other news, the US deputy Treasury secretary resigned after just five months
Ascoria’s chief revenue officer shares her career wisdom garnered from the disparate worlds of tax technology, electric cables, radio DJing and more
Businesses no longer have a choice when it comes to tax technology transformation. Pavlo Boyko of TMF Group says the question is simply: sink or swim?
The firm is hunting for a senior TP manager in its quest to build a full-service practice in Indonesia, A&M Tax’s Jakarta head Jaap Zwaan tells ITR
With a new government in place, the evolving tax landscape presents both opportunities and challenges for taxpayers
Major economies have expressed concerns, with China arguing a US global minimum tax exemption would be a violation of the principle of fair competition – ITR understands
Senator Richard Colbeck told ITR he was concerned by the decision to let PwC Australia tender for government contracts again after a scandal-induced ban
Whether it be due to a fragmented advisory market or a rise in M&A, Italy’s frenetic hiring has not gone unnoticed by ITR’s Talent Tracker
The deal gives Azets 14 new partners and boosts its Swedish revenues to over $100 million; in other news, Svalner Atlas launched in Copenhagen
The tax technology company will be providing a free demonstration of its OTP software and offering best practice advice on whether to ‘buy or build’ on September 8
Gift this article