Indonesia: New regulations on exchange of information: beginning of a new era
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Indonesia: New regulations on exchange of information: beginning of a new era


Freddy Karyadi

Nina Cornelia Santoso

In preparation for the first exchange of information (EOI) by September 2018, the Indonesian government has enacted several implementing regulations, despite the ongoing discussions to issue a Government Regulation in Lieu of Law (Peraturan Pemerintah Pengganti Undang-undang, or Perppu) as the legal basis for EOI in Indonesia. The said Perppu is currently being proposed to the President and is expected to be signed in the near future. Upon its enactment, the Perppu shall become effective, despite the initial plan to implement the first EOI by 2018. Subsequently, the Indonesian tax authority may immediately access both foreign or local customer information data from banking, capital market, insurance, and other financial sectors.

On March 6 2017, the Minister of Finance (MoF) issued MoF Regulation No. 39/PMK.03/2017 concerning Procedures on Exchange of Information based on International Agreements (MoF Reg 39). It is important to note that an EOI is reciprocal in nature and will be conducted based on international agreements related to tax, which include:

  • Double taxation agreements (DTAs or tax treaties);

  • Tax information exchange agreements;

  • The OECD's Convention on Mutual Administrative Assistance in Tax Matters;

  • Multilateral or bilateral competent authority agreements;

  • Intergovernmental agreements; or

  • Other bilateral or multilateral agreements.

MoF Reg 39 gives authority to the competent authority (as contemplated under the relevant international agreement related to tax) (CA) to conduct the EOI. There are different types of EOI, as follows:

  • EOI upon request – The Indonesian CA may submit a written request for an EOI to a relevant partner country or partner jurisdiction CA in cases where an Indonesian taxpayer is suspected of having avoided tax or conducted tax treaty shopping; and/or being incompliant of their taxation obligations. This method may be enforced if the taxpayer is being supervised/investigated for their tax compliance, or is undergoing tax dispute resolution. MoF Reg 39 also provides limitations that the information requested must satisfy certain requirements such as, among others:

  • not to be speculative;

  • have a clear basis;

  • be based on adequate suspicions and allegations;

  • not result in the disclosure of trade/business/industry/skills secrets; and/or

  • not relate to a country's secrecy/public policy/sovereignty/state security/national interests.

  • Spontaneous EOI – The Indonesian CA may spontaneously submit certain written information to a relevant partner country or partner jurisdiction CA. The exchanged information must comply with certain criteria such as, among others:

  • there must be an indication of potential tax loss in Indonesia and/or a partner country or partner jurisdiction;

  • there must be suspicions of non-reporting of payments to Indonesian taxpayers/taxpayers of a partner country or partner jurisdiction;

  • there must be withholding or exemptions of tax in Indonesia received by taxpayers of a partner country or partner jurisdiction or vice versa;

  • there must be business activities between Indonesian taxpayers and taxpayers of a partner country or partner jurisdiction conducted through one or several countries that are structured in such a way that result in a tax reduction in Indonesia/partner country or partner jurisdiction/both countries; and/or

  • there must be suspicions of tax reduction resulting from unjust repatriation of profits within a business group.

  • Automatic EOI – Automatic EOI is conducted periodically, systematically, and continuously at a certain time over certain information, i.e. information related to withholding of income tax paid to an Indonesian tax subject/tax subject of a partner country or partner jurisdiction; financial information of foreign customer; country-by-country reporting; and/or other taxation information based on a mutual agreement between Indonesia and the relevant partner country or partner jurisdiction.

In addition, MoF Reg 39 stipulates that financial services institutions must identify and submit a report on financial information of foreign customer to the Indonesian tax authority, through the financial services authority (locally known as Otoritas Jasa Keuangan, or OJK).

MoF Reg 39 also allows CAs to exchange information in the following manners:

  • Competent authority meetings – Meetings held by an Indonesian CA and partner country or partner jurisdiction CA to discuss matters related to the EOI;

  • Tax examinations abroad – The Indonesian CA may conduct tax examinations at the relevant partner country or partner jurisdiction or vice versa if the information received through a written request is insufficient, or in the event that an acceleration of a request is required;

  • Simultaneous tax examinations – This method refers to simultaneous and independent tax examinations in Indonesia and in one or more partner countries or partner jurisdictions in order to obtain and exchange relevant information. These examinations are applicable if, among others:

  • there are connections on taxation matters between Indonesian taxpayers and taxpayers of a partner country or partner jurisdiction;

  • there are common interests related to taxation matters between the Indonesian tax authority and one or more tax authorities in a partner country or partner jurisdiction;

  • there are suspicions of tax avoidance;

  • the CAs consider that EOI in writing is insufficient/ineffective/inefficient; and

  • there is significant potential tax revenue.

During the implementation of the EOI, the Indonesian tax authority may request information from an Indonesian taxpayer or other parties who have relevant taxation information on the concerned taxpayer.

MoF Reg 37

On a separate note, the MoF also issued MoF Regulation No. 37/PMK.03/2017 concerning Procedures on Payment and Reporting of Income Tax on Income from Transfer of Real Estate in a Certain Collective Investment Contract Scheme (MoF Reg 37).

MoF Reg 37 was prepared to implement the Government Regulation No. 40 of 2016 concerning Income Tax on Income from Transfer of Real Estate in a Certain Collective Investment Contract Scheme, which in principle regulates that income received or obtained by an Indonesian taxpayer from the transfer of real estate to a special purpose company (SPC) or collective investment contract (CIC) in certain CIC schemes shall be subject to a 0.5% final income tax on the gross value of the real estate transferred (income tax). Certain CIC schemes refer to CIC in the form of the real estate investment fund (REIT), with or without using an SPC.

The income tax would be due when partial or full payment is made and must be paid by the transferor to the state treasury prior to execution of any deed/decision/agreement on the transfer of real estate to a SPC or CIC in certain CIC scheme by a competent authority. The transferor must first submit a notification letter concerning the transfer of real estate to the relevant tax office where the transferor is registered as a taxpayer by enclosing supporting documents that indicate that the transaction falls under the scope of MoF Reg 37.

Freddy Karyadi ( and Nina Cornelia Santoso (, Jakarta

Ali Budiardjo, Nugroho, Reksodiputro, Law Offices

Tel: +62 21 250 5125


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