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Investment Window into Indonesia (IWI)
Welcome to Indonesia A. Introduction into Indonesia 2 1.General overview 3 2.Demography 4 3. Investment climate 6 4. Industry overview and opportunities 8 5.Regional snapshot 9
B. Identifying your investment Stage 12
C. Establishment of company:getting started 13 1.General investment policy 13 2.Forms of entity 14 3.Investment Procedures 16 4.Mergers and acquisitions 16
D. Taxation in Indonesia 18 1. Tax incentives 18 2. Tax administration 19 3. Business taxation 20 4. Taxes on individuals 32 5. Indirect taxes 34 6. Withholding taxes 37
E. Audit and compliance 38 1. Accounting period 38 2. Currency 38 3. Language, accounting basis and standards 38 4. Audit Requirements 38 5. Independence 39
F. Labour environment 40 1. Employee rights and remuneration 40 2. Wages and benefits 40 3. Termination of employment 41 4. Labour-management relations 41 5. Employment of foreigners 41
About Deloitte 42
Contacts 44 Investment Window into Indonesia (IWI) | Foreword
Foreword
Selamat datang di Indonesia!
Since the silk road era, Indonesia have thrived to be one of the most prominent trading countries. Indonesia also strategically lies within two oceans (Pacific Ocean and Indian Ocean) and two continents (Asia and Australia) to make this nation rich for its natural resources.
The current Indonesian government recognizes the fact that it is essen- tial to efficiently utilize our natural resources by generating new invest- Claudia Lauw Lie Hoeng ments. Several measures have been taken to ensure investment con- Deloitte Indonesia Country tinues to come. Business licensing applications between ministries are Leader being expedited, synchronized, and integrated into an Electronic Single Submission System (OSS). In addition, Indonesian government releases Economic Reform Packages or known as Paket Kebijakan Ekonomi and infrastructure development also being pushed to attract investors.
With increasing access and exposure to information, technologies became another focus area for investors. In tandem with Financial Services Authority (OJK), Government captures this importance and encourages financial technology to emerge in the market.
Our effort to push for investments also evident during the recent 18th Asian Games since it were held at 1962 Asian Games in Jakarta. As the hosting country, we showed how conducive environment Indonesia was for promoting attainable investment growth.
In support of the government’s efforts, and to have quick and clear answers for everyone contemplating investing in Indonesia, I am very pleased to present the newly redesigned collaborative work of Deloitte Indonesia’s dedicated team of experts, “Investment Window into Indo- nesia (IWI)”.
I trust that this publication will also give a broader and impactful insight to every prospective investor, and that it will be a prime tool for them to explore numerous opportunities that await them the moment they start doing business in Indonesia.
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Investment Window into Indonesia (IWI) | A. Introduction into Indonesia
1.General overview The real GDP growth 5.1% in 2017 as With Indonesia average inflation A diverse archipelago nation of more a whole, although in the last quarter reached 3.7% in 2017, down from than 300 ethnic groups, Indonesia con- of 2017 it increase to 5.2%, but edged 3.5% in 2016 and is expected to be tinues to be one of the largest econo- down to 5.1% in the first quarter of maintained at an annual average of my in Southeast Asia. Indonesia ranks 2018. Within the 5 years (2018-2022), 4.0% in 2018-2022. Due to rising trade the fourth most populous country country’s growth contribution from tensions between nations and elec- in the world, the world’s 10th largest private investment (infrastructure and tions in 2019, the Rupiah will remain economy in terms of purchasing power manufacturing) will take time to have a volatile against the US Dollar. It will parity, and a member of the G-20. significant impact on the economy. The return to modest trend in 2020-2022 economy will be supported by private as global economic fundamentals consumption, which is forecasted to gradually recover. increase by 5.2% on average per year over the next five years.
Economic growth
Indicator 2017a 2018f 2019f 2020f 2021f 2022f
GDP Growth (%, y-o-y) 5.1 5.2 4.9 4.9 5.0 5.1
Private Consumption(%, y-o-y) 5.0 5.1 5.4 4.8 5.6 5.3
Government Consumption(%, y-o-y) 1.9 4.0 3.7 4.0 4.2 4.0
Gross Fixed Investment(%, y-o-y) 6.1 6.2 5.5 5.0 5.7 5.8
Exports(%, y-o-y) 9.1 10.1 10.3 4.1 5.9 6.5
Imports(%, y-o-y) 8.0 13.6 12.1 3.8 7.6 7.1
Inflation(%, y-o-y) 3.7 4.2 4.5 2.5 5.7 3.2
USD exchange rate(end period) 13,548 14,894 14,305 14,300 13,750 13,550 aActual fForecast Source: EIU
To strengthen the country’s invest- Indonesia’s nominal GDP have risen ment climate and economic growth, by 8.8% from USD933 billion in 2016 the government continues to an- to USD1,015 billion in 2017, while nounce policy reforms, more incen- GDP (PPP) per capita have risen by tives, and deregulations intended to 5.1%. Based on the 20-year long-term attract both domestic and foreign national development plan (RPJPN) investments. The most notable eco- spanning from 2005 to 2025, Indone- nomic reforms are 16 Economic Policy sia plans to achieve per capita income Packages; 2 new packages released in equivalent to a middle income country 2017 with main focus on reducing lo- by 2025. The highest contributor to gistics dwelling time from an average GDP is the manufacturing industries of 2.9 days to 2 days’ time and accel- sector or around 22% from total GDP. erating business license permit into a single submission system.
3 Investment Window into Indonesia (IWI) | A. Introduction into Indonesia
Top 10 Real GDP Growth Among G-20 Countries Projected by IMF
India
China
Indonesia
Turkey The IMF projects Indonesia will be at the top 3 fastest economic growths among rgentina G-20 countries South Korea
Mexico
ustralia
South frica Saudi rabia
Source: International Monetary Fund; World Economic Outlook, October 2017
FDI Realization 2017 by location FDI Realization 2017 by Country of Origin
16% West ava 26% Singapore 51% 4% East Kalimantan 41% apan South Korea 9% Banten Hong Kong DKI akarta etherlands East ava 15% thers 14% thers 5% 5% 7% 6%
Source: BPS Source: BPS
2.Demography ••Over 60% of the population is be- Indonesia consists1% of 34 provinces;Agriculture, hunting,tween forestry, 20 and and fishery 65, with a low depen- Mining and uarrying 16,056 islands, with77%% more than 261 dency ratio and a dynamic workforce 13% 6% Manufacturing million people, making Indonesia the with high literacy 9% Electricity, gas and water supply fourth largest country in the worldConstruction in 4% ••Around 52% of the population lives terms of population. The demographicWholesale and retail trade, restaurants and hotels 41% 5% in urban areas advantages of the 260 million Transportation, warehousing, and communications Real estate and business services people are: 14% ••Indonesia’s population comprises Community, social, and personal services more than 39% of the total popula- tion of 10 Southeast Asian countries
4 16% West ava 26% Singapore 51% 4% East Kalimantan 41% apan South Korea 9% Banten Hong Kong DKI akarta etherlands East ava 15% Investment Window into Indonesia (IWI) | A. Introduction into Indonesia thers 14% thers 5% 5% 7% 6%
FDI Realization 2017 by Sector According to the Trading Economics, Indonesia’s labour force participation 1% Agriculture, hunting, forestry, and fishery Mining and uarrying rate grew from 68.1% in 2016 to 69.0% 77%% 13% 6% Manufacturing in 2017. It is estimated to increase to 9% Electricity, gas and water supply 69.2% in 2018. Indonesia also has a Construction 4% large consumer base with fast-growing Wholesale and retail trade, restaurants and hotels 41% 5% spending power. The middle class is Transportation, warehousing, and communications rising in Indonesia. Around 7 million 14% Real estate and business services Community, social, and personal services people are expected to join the middle class per year. Consumer expendi- Source: BPS ture has grown at a 13.8% CAGR from 2000-2012 and is expected to contin- ue at an 11.5% rate in 2012-2017.
Indonesia Population by Age and Gender Groups
1.94 75+ 2.73 70-74 2.21 1.87 65-69 3.08 2.95 60-64 4.4 4.47 55-59 5.97 5.93 50-54 7.33 7.27 45-49 8.49 8.54 40-44 9.41 9.48 35-39 10.09 9.98 30-34 10.27 10.24 25-29 10.45 10.57 20-24 10.7 11.01 15-19 10.85 11.37 10-14 11.07 11.64 5-9 11.59 12.14 0-4 11.68 12.17
10 5 0 5 10 15 million people
Male Female
Source: 2018 © Datebooks, Katadata Indonesia
5 Investment Window into Indonesia (IWI) | A. Introduction into Indonesia
3. Investment climate Indonesia’s debt to GDP ratio has after Standard & Poor (S&P) has lifted A large part of Indonesia’s economic steadily declined from 83% in 2001 to its rating on the country’s debt on May success is a result of the growing mid- be less than 26% by the end of 2013 2017 and keep the rating as stable dle class and stable economic growth. – the lowest among ASEAN countries, outlook by 2018. The ratings reflect Indonesia is one of the MINT econo- aside from Singapore, which has no Indonesia’s resilience to the global mies (Mexico, Indonesia, Nigeria and government debt. As a result, the financial crisis, improving government Turkey), namely those that are the most country continues to receive good re- and external credit-metrics, and an attractive to long- term investors due to views and for the first time since global ability to manage domestic political their favourable demographic profiles. financial crisis, Indonesia’s sovereign challenges to the reform agenda. bonds were rated investment grade by all three major credit ratings agencies
Rating Agency Rate Outlook
Fitch Rating BBB- Stable
Mood’s Baa3 Stable
Standard and Poor’s BBB- Stable
Source: Indonesia Investment Coordinating Boarding (BKPM), 2017
Ease of Doing Business index assessed by World Bank for 190 countries positioned Indonesia at 72; an increase of 19 levels from rank 91 in 2017.
6 Investment Window into Indonesia (IWI) | A. Introduction into Indonesia
Southeast Asia Ease of Doing Business Rankings 2008-2017 In 2016, the confidence in national government was the highest in Indonesia compared with the 42% on average in OECD
0 Singapore
0 Malaysia Thailand 40 Brunei 0 Vietnam Indonesia 0
100 Philippines 1 0 Cambodia 140 Laos
1 0 Myanmar 1 0 East Timor
00
Source: World Bank Doing Business 2018
Confidence in National Government in 2016 and Its Change Since 2007
100
0
0
40
0
0 Italy India Chile Israel Brazil Spain apan China Latvia Korea ECD Russia Turkey France Poland Ireland ustria Mexico Iceland reece Finland Estonia Canada orway Sweden Belgium Slovenia Hungary ustralia ermany Lithuania Denmark Colombia - 0 Indonesia Costa Rica Switzerland South frica etherlands Luxembourg ew Zealand United States Czech Republic Slovak Republic United Kingdom -40 in 01 points change since 007
Source: OECD Goverment at a Glance 2017
7 Investment Window into Indonesia (IWI) | A. Introduction into Indonesia
4. Industry overview and coal (and other mining products), Government sees large potential in opportunities palm oil, agricultural products, elec- e-commerce industry to connect multi Indonesia has a well-balanced econo- trical machinery and equipment, and industries with local and international my, in which all major sectors play an fish. Indonesia’s government plans to market. Jokowi also appointed Alibaba important role. Agriculture historically increase production of core commod- Group as an adviser to develop the has been the dominant sector in terms ities as seen below. However, due to digital economy market which create of both employment and output. The the recent drop in commodities prices, an open access to micro, small and country has a vast range of mineral Indonesia has to realign its trade strat- medium-sized enterprises (SME) to resources, which have been exploited egy, focusing more on value added enter global value chain. over the past four decades, enabling industries (manufacturing and smelt- the mining sector to make an import- ing) and infrastructure development. According to The Investment Strategic ant contribution to Indonesia’s balance In addition, Indonesia’s government Planning for the period of 2015-2019, of payments. plans to increase the production of Indonesian Government has laid new core commodities for domestic con- focus on several business sectors Indonesia has a well-diversified trading sumption and to reduce heavy reliance as follows: economy. Oil and gas is the country’s on imports. largest export category, followed by
35 GW power Infrastructure 24 Seaports generation
Agriculture Food estate Corn plantation Cattle
Textile Textile Food and beverages Furniture Toys
Chemical and Import-substitution Iron and steel Component pharmaceutical
CPO and derivative Wood products, Electronics Automotive Industry products pulp and paper Export-oriented Fish and derivative Machinery Rubber products Shrimp products
Downstream industry Cacao Sugar Smelter of natural resources
Maritime Ship building Fishery industry Cold storage Maritime technology
Meetings, incentives, Strategic tourism 15 new industrial Tourism, SEZ and Industrial Park conferences, and 8+11 SEZs areas parks exhibitions (MICE)
Infrastructure Sector ment plans to build more roads, toll of regional infrastructure projects, the The President Joko Widodo govern- roads, airports, and railways, not only scope has continued to expand and ment plans to improve archipelago focusing on Java but also in Sumatra, will now include enhanced policy co- connectivity and promotes balanced Kalimantan, Sulawesi, and Papua. Ad- ordination across the Asian continent, growth between the western and ditional infrastructure development is which path crosses Indonesia. High- eastern parts of Indonesia. The also influenced by China’s new round speed railway from Jakarta-Bandung government has introduced a “sea of reform and overseas expansion. marks China’s first milestone project toll road” concept to connect Indone- The centrepiece is the Belt and Road and is expected to expand more lanes sia’s archipelago through seaports in initiatives (BRI) which include both as it gains permits from the Transpor- the main corridor between western foreign policy and domestic economic tation Ministry. and eastern islands to reduce high strategy. Originally billed as a network logistics costs. In addition, the govern-
8 Investment Window into Indonesia (IWI) | A. Introduction into Indonesia
Sea toll concept - the world maritime axis: • Develop 24 new strategic ports • Add vessels (pioneer cargo, transport vessel, pioneer crossing vessel) • Develop 60 crossing port
• Develop 15 new airports • Develop air cargo facilities 2015-2019 in 10 airport through PPP • Increase number of pio- neer airplanes by 20 units
Power Road National state 40.1% US$192.7 billion • Develop 42 GW Electric- • 2,650 km new roads ity Power Plant (7GW + • 1,000 km of new Toll Road 35,000MW program) Regional state • Rehabilitate 46,770 km Infrastructure 9.9% Funding US$47.4 billion existing road needed New railway tracks in Java, Urban transport: US$480 billion SOE 19.3% Sumatera, Kalimantan and US$92.7 billion • Develop Bus Rapid Transit Sulawesi: (BRT) in 29 cities • 2,159 km inter-urban Private sector • Develop Mass Rapid Transit 30.7% railways US$147.2 billion (MRT) in 6 metropolis and • 1,099 km urban railways 17 large cities
Source: Ministry of Transportation RI, May 2016; Buku RPJMN 2015-2019
5.Regional snapshot For those who are targeting appropriate location to invest in or expand current business scope, we selected top 10 provinces and presented as regional snapshot, with regional GDP on a yearly basis and several indicators in foreign investment field.
Top 10 Regional Demographics
Population (in Province Provincial Capital Area (sq km) No. of Islands No. of Regencies No. of Cities thousands) (2017) DKI Jakarta Jakarta 664.0 287 1 5 10,277.9
West Java Bandung 47,799.8 287 29 9 38,075.3
Central Java Semarang 35,377.7 131 18 9 47,379.4
East Java Surabaya 32,800.7 296 29 6 34,019.1
Banten Serang 87,023.7 139 10 2 6,501.0
Riau Pekanbaru 72,981.2 419 25 8 14,102.9
North Sumatera Medan 129,066.6 370 7 3 3,501.2
South Sumatera Palembang 9,662.9 131 4 4 12,203.1
East Kalimantan Samarinda 46,717.5 295 21 3 8,606.4
South Sulawesi Makassar 91,592.4 53 13 4 8,160.9
Source: BPS
9 Investment Window into Indonesia (IWI) | A. Introduction into Indonesia
Top 10 Gross Regional Domestic Product USD mn
Province 2015 2016 2017 % Total 2016
DKI Jakarta 143,778 162,036 177,806 17.2%
East Java 122,500 138,065 148,950 14.7%
West Java 110,558 122,997 131,755 13.1%
Central Java 73,510 81,276 87,565 8.6%
Riau 47,292 50,785 52,056 5.4%
North Sumatera 41,444 46,769 50,462 5.0%
East Kalimantan 36,380 37,740 43,707 4.0%
Banten 34,646 38,429 41,636 4.1%
South Sulawesi 24,773 28,223 30,903 3.0%
South Sumatera 24,119 26,453 28,309 2.8%
Total 659,000 732,774 793,148 77.8%
Source: BPS
Top 10 Regional FDI by Value
Province 2015 2016 2017
DKI Jakarta 3,619 3,398 4,595
East Java 2,593 1,941 1,567
West Java 5,739 5,471 5,143
Central Java 850 1,031 2,373
Riau 653 869 1,061
North Sumatera 1,246 1,015 1,515
East Kalimantan 2,381 1,140 1,285
Banten 2,542 2,912 3,048
South Sulawesi 233 373 712.8
South Sumatera 646 2,794 1,183
Total Top 10 20,504 20,942 22,482
Total FDI by value 29,276 28,964 32,240
Source: BPS
10 Investment Window into Indonesia (IWI) | A. Introduction into Indonesia
Top 10 Regional FDI by No. of Projects
Province 2015 2016 2017
DKI Jakarta 4,463 6,751 8,803
East Java 742 1,473 1,750
West Java 4,497 5,369 5,309
Central Java 608 1,054 955
Riau 243 394 285
North Sumatera 438 688 564
East Kalimantan 406 466 340
Banten 1,737 2,161 2,479
South Sulawesi 165 309 196
South Sumatera 135 251 261
Total Top 10 13,434 18,916 20,942
Total FDI projects 17,738 25,321 26,257
Source: BPS
Top 10 Provincial Minimum Wage (UMP) per Month USD
Province 2015 2016 2017
DKI Jakarta 195.7 230.7 247.5
East Java 72.5 N/A 102.4
West Java 72.5 167.5 104.8
Central Java 66.0 81.9 100.8
Riau 136.1 155.9 167.2
North Sumatera 117.8 134.9 144.7
East Kalimantan 146.9 160.9 172.6
Banten 116.0 132.8 142.5
South Sulawesi 145.0 167.5 179.7
South Sumatera 143.1 164.2 176.2
Source: BPS
11 Investment Window into Indonesia (IWI) | B. Identifying our Investment Stage
B. Identifying your investment Stage
Five stages of organization evolution
Greenfield/ Brownfield
阶段 Stage Development Startup Growth Expansionv Maturity
• Get started • Company • Performance • Managing growth • Going public-IPO • Plan & strategy incorporation • Expand manage- • Going concern • Reduce debt • Investment • Form team members ment team • Business diversifi- • Sale of business/ Concerns • Product/service • Revenue cation divestiture development
• Market study • Licensing • Early audit • Audit & • Pre-IPO preparation • Business plan/ busi- • Labour environment procedure compliance • Business & debt ness model • Financial forecast/ • Tax compliance • Tax efficiency restructuring • Buyside/ sellside projection • Merger & • Cost efficiency • Business advisory Acquisition • Financial modelling transformation • Risk management • Business and asset Key elements valuation • Employee training
12 Investment Window into Indonesia (IWI) | C. Establishment of Company: Getting Started
C. Establishment of company:getting started
1.General investment policy Banking and financing Foreign entity could have business Business environment The Banking Law permits two catego- activity in Indonesia by setting up a Indonesia is a member of the ASEAN’s ries of traditional banks: general com- Foreign Representative Office (RO) free trade agreements with China, mercial banks and rural banks (BPRs). or become a Foreign Investment South Korea, India, Australia and New BPRs, which undertake simple kinds Company (PT PMA) as a Limited Zealand. Indonesia and Japan signed of banking activities, operate on a Liability company. Both must be the Indonesia and Japan Economic small scale and target their services to applied and obtained approval from Partnership in 2007. lower-income individuals. Commercial BKPM through the OSS (Online Single banks are free to offer various banking Submission) system. Price controls services, although foreign exchange A few commodities and services transactions require special qualifi- As a PT PMA, subject to the following remain classified as “administered cations and a permit. Both general rules: prices”. These include petroleum, elec- commercial banks and rural banks can 01. Company’s Law No.40 year 2007 (in tricity, liquefied petroleum gas, rice, carry out either conventional or sharia relation to: e.g. minimum of share- cigarettes, cement, hospital services, banking business. holders, number of Board of Direc- generic medicine, potable/piped water, tors and Board of Commissioners, city transport, air transport, telephone Bank Indonesia is the central bank. Articles of Associations, etc). charges, trains, salt, toll road tariffs, Indonesia’s main financial centres are and postage. Jakarta, Semarang, Bandung and Sura- 02. Investment Law No.25 year 2007 baya (Java), Medan and Palembang (Su- (in relation to investment rules and Intellectual property matera), Denpasar (Bali) and Makassar activity) Indonesia’s intellectual property laws rec- (Sulawesi). Singapore functions as 03. Negative List of Investment (NIL) ognize patents, trademarks, copyrights Indonesia’s offshore banking centre. No.44 year 2016 (in relation to and industrial designs. Both the licensor the list of business fields that are and licensee may sue for infringement. Foreign investment closed to investment and business The laws assign civil cases to the com- The Investment Coordinating Board fields that are conditionally open mercial court and establish a mechanism (BKPM) is responsible for promoting for investment). Many business for alternative settlement by arbitration, foreign and domestic investment and sectors are open to PT PMA, every as well as allowing for court-ordered approving most project proposals in sector has certain restrictions on injunctions against infringement. Indonesia. Other government agencies Foreign Capital Ownership. or ministries handle investments Trademark protection is valid for 10 years in the oil and gas, banking and The Foreign Investment Law includes a and can be extended for an additional financial industries. The BKPM or guarantee that foreign investors will be 10-year period. A standard patent is valid the corresponding provincial board treated equally to domestic investors for 20 years, while a simple patent is valid approves foreign and domestic and the Indonesian government will for 10 years. investment in all other sectors. not nationalize a foreign investment or revoke the investor’s rights to control a foreign investment, unless it is in the national interest to do so and compen- sation is paid.
13 Investment Window into Indonesia (IWI) | C. Establishment of Company: Getting Started
Exchange controls Domestic commercial banks must sub- 2.Forms of entity The rupiah is freely convertible, mit monthly reports to Bank Indonesia Capital Requirements for a limited although approval of Bank Indone- on their foreign exchange transactions. liability company sia must be obtained before more Failure to report may result in mon- More than IDR10 billion, including than IDR100 million is taken out of etary penalties or even revocation of working capital for one year, machin- the country. Authorization of Bank license. Financial institutions are also ery and others, not including land and Indonesia may be provided only for required to submit monthly reports on buildings; at least 25% must be issued the purpose of testing of cash ma- their foreign currency transactions. and paid- up capital. Higher minimums chines, overseas exhibitions and other for authorized capital apply in certain purposes that, according to the bank, Non-financial institutions must report sectors. All issued capital must be paid serve the public interest. the movement of financial assets up and evidence of payment must (such as equity in overseas companies be submitted to the Ministry of Law A person carrying IDR100 million or and savings at overseas banks) and and Human Rights (MOLHR) to obtain more into Indonesia must verify the liabilities (such as overseas loans and approval for the deed of establishment authenticity of the funds with Indo- trade payables) between residents containing the articles of association. nesian customs upon arrival. A wire and non-residents, including overseas All shares issued subsequently must transfer with a value of more than transactions by residents. The require- be fully paid up upon issue. USD100,000 to a non-resident must ment, applicable to companies with be supported by a statement and total assets of at least IDR100 billion or For foreign investment companies, the supporting documentation obtained annual sales of at least IDR100 billion, rupiah value of capital is assigned at from the customer for the underlying is for transactions that are not con- the foreign exchange rate prevailing transaction. For transfer with a value of ducted through a domestic bank or at the time the investment license was USD100,000 or below, only a state- financial service company. granted. However, the rupiah value of ment letter is required. payments of capital in foreign curren- Investment Law No.25 of 2007 guar- cy is calculated at the exchange rate Transaction involving swap sell foreign antees foreign investors the right to prevailing at the time of payment. This currency against Rupiah for transac- transfer (in the currency of the original calculation applies to payments in kind, tion amount of USD25,000 or less, investment) all after-tax profits, certain which must be valued by an indepen- a declaration letter is also required costs and (in the event of nationaliza- dent appraiser. to justify the purchase, while for an tion) compensation. In certain circum- amount exceeding USD25,000, it must stances, convertibility is guaranteed for A company may repurchase its shares also be supported with documentation capital repatriation. if (1) payment is made out of net prof- obtained from the customer for the its and does not cause the company’s underlying transaction. Indonesian Rupiah (IDR) must be used in net assets to fall below the total of all transactions that have a purpose of subscribed capital plus the required Indonesia does not restrict the trans- payment settlement of obligations that reserve; and (2) the aggregate nominal fer of foreign currency funds to or must be satisfied with a cash payment total shares owned by—or pledged in from foreign countries, but inbound and other financial transactions con- favour of—the company or its subsid- investment capital requires approval. ducted in Indonesia. Exemptions are iary does not exceed 10% of the total Offshore loans must be registered provided for certain transactions related subscribed capital. with Bank Indonesia, with subsequent to the implementation of the state movement reported monthly, to en- budget; the receipt or grant of offshore Increases and decreases of capital able the bank to monitor the country’s grants; international commercial trans- must be approved at a general meet- foreign exchange exposure. actions; bank deposits in foreign curren- ing of shareholders; a reduction of cy; and offshore loan transactions. capital also requires that there will be no objection from a creditor.
14 Investment Window into Indonesia (IWI) | C. Establishment of Company: Getting Started
Founders, shareholders: Based on on the grounds that the company was Branch of a foreign corporation the Company Law, at least two share- harmed as a result of mismanagement The Investment Law requires that a holders are required at all times, which or negligence. foreign-owned enterprise operate may be two individuals, two companies wholly or mostly in Indonesia as a or a combination thereof in certain General shareholder meetings must be separate business unit to be organized sectors. Shareholder liability is limited held at least once a year to approve the under Indonesian law and resident in to the amount they contribute. annual report and determine whether Indonesia. Branches are, therefore, profits will be retained or distributed as normally not permitted, except for Minority shareholder should have dividends. The meeting must be held foreign banks, oil and gas companies. minimum ownership of 1% in the case within six months of the closing of the Certain businesses, such as trading of a foreign shareholder, or 5% for a company’s financial year. Decisions are or construction, may establish their local shareholder. The minimum paid- taken by majority vote or as provided representative offices. in capital is IDR10 million. for in the articles of association. Func- tions of the general meeting of share- Representative office Board of directors/management: holders that cannot be delegated to A foreign company can set up a trad- A company must have at least one di- the directors or commissioners include ing representative office, but it must rector and one commissioner. Certain amendments to the articles of asso- obtain approval from the BKPM. There companies, notably public companies, ciation, appointment and dismissal of are several types of representative must have at least two directors and members of the board of directors and office available, including a trading rep- two commissioners, while a bank must commissioners, and mergers, consoli- resentative office, regional represen- have at least three directors and two dations and dissolutions. tative office or a foreign construction commissioners. When there is more service representative office. A trading than one director, each is entitled to Taxes and fees: Notary fees amount representative office(“TRO”) can only represent the company (subject to to 0.1%-1% of a company’s authorized engage in business promotion or exceptions stated in the articles of capital, but are negotiable. A nominal market research activities. A regional association). In foreign/domestic joint stamp duty is charged on the deed of representative office (“RRO”), other ventures, the composition of the board establishment. than an office in the financial sector, of directors generally reflects the ratio must also obtain approval from the of foreign to local shareholdings. Types of shares: The company’s BKPM to set up. Its activities are limit- capital may be issued in several classi- ed to supervision and coordination; it Directors must carry out their du- fications of equity shares, at least one may not own or maintain production ties in good faith, and a disposal or of which must have the characteristics facilities or operational activities and, encumbrance of substantial company of ordinary shares. Shares may be therefore, it cannot accept orders, assets must be approved at a general registered or bearer, but bearer shares participate in tenders, sign contracts, meeting of shareholders. At least 75% may not be issued until the full value or engage in the importation of goods. of issued shares must be represent- has been paid up. In practice, all shares A foreign construction service repre- ed at the general meeting at which held by foreign investors must be in sentative office (“BUJKA”/ Badan Usaha such approval is sought. One or more registered form. Both common and Jasa Konstruksi Asing) may conduct a shareholders representing, collective- preferred shares are permitted, but construction project through a joint ly, at least one-tenth of a company’s subsequent issues of preferred shares operation by obtaining approval from total issued shares may, in the name may be sold only to those already hold- the BKPM (on behalf of Ministry of of the company, file a civil complaint ing preferred shares. Each share nor- Public Works). BUJK also need to ob- against a director or commissioner mally has one vote, unless otherwise tain a Construction License (“IUJK”/ Izin provided in the articles of association. Usaha Jasa Konstruksi), through the Association member.
15 Investment Window into Indonesia (IWI) | C. Establishment of Company: Getting Started
3.Investment Procedures According to NIL No.44 year 2016, of companies. Mergers generally are Company Law No.40 of 2007 regulates there are restrictions on foreign permitted with the consent of 75% of limited liability (Perseroan Terbatas, or ownership in certain business sectors. the shareholders. Some protection for PT) companies. PT is the most com- Investment in infrastructure requires minority shareholders is provided, par- mon form of business organization a joint venture company, with the In- ticularly with respect to the share sale and the one to which foreign investors donesian partner holding at least price, which must be “fair.” Unless the are restricted under the Investment 67% equity. surviving company retains its name and Law. Branches of foreign corporations management, a merged entity must normally are not permitted outside of 4.Mergers and acquisitions adopt a new name and management. the banking, oil and gas sectors. The Company Law regulates mergers, consolidations, acquisitions and splits a. Preparation
Task Institution
•• Optain Principle License (Izin Prinsip) •• BKPM
•• Obtain company deed of establishment and articles of association •• Public notary, ratified by Ministry of Law and Human Rights (MOHLR) b. Pre-operation
Task Institution
•• Obtain producer importer identification number (API-P) for manufacturers; •• BKPM
•• Submit investment activities report (LKPM) every 3 months; •• BKPM
•• Obtain facilities, e.g. machinery import duty exemption and tax facilities, if needed; •• BKPM, Ministry of Finance
•• Obtain licenses from local government, e.g. building permit, domicile certificate; •• Local government
•• Obtain permits from relevant sectoral ministries, e.g. broadcasting permit. •• BKPM, sectoral ministries
c.Operation
Task Institution
•• Obtain business licenses (izin usaha); •• BKPM
•• Obtain general importer identification number (API-U); •• BKPM
•• Submit investment activities report (LKPM) every 6 months; •• BKPM
•• Obtain raw material import duty facility, if needed; •• BKPM
•• Obtain periodic operational permits from sectoral ministries, e.g. hotel permits •• BKPM, sectoral minitries
16 Investment Window into Indonesia (IWI) | C. Establishment of Company: Getting Started
Mergers of limited liability compa- ject to maximum fines of IDR100 billion nies are possible where one or more and six-month prison terms for their companiesare merged into a single executives. surviving company (with the simultane- ous dissolution of the other company Requirements or companies). In a consolidation, two For tax purposes, foreign investment or more companies merge into a new (PMA) companies, permanent estab- entity and each of the original compa- lishments (PE), certain entities with nies is dissolved; in an acquisition, an foreign affiliations and companies that individual or legal entity takes over all prepare their financial statements or most of the shares of a company, using US dollar as the functional resulting in a transfer of control. currency in accordance with PSAK 10 may maintain English language and US 5.Business Regulation dollar bookkeeping, provided approval Monopolies and restraint of trade from the Minister of Finance is ob- The Anti-Monopoly and Unfair Com- tained (contractors of oil and gas petition Law prohibits a company or PSCs and companies operating under companies group from holding more Mining Contracts of Work need only than a 50% or more share of the do- to provide notification). A change in mestic market, or two or three compa- the method of bookkeeping is pos- nies or companies group from holding sible, subject to approval from the 75% or more of the market between Director General of Tax (DGT). The them. Market share is determined by DGT also sets the exchange rate used sales value rather than volume. The for accounting and tax payments on law prohibits vertical restrictions on a weekly basis. Books, records, an- competition and any deals or con- nual balance sheets and copies of tracts allowing for monopolies, oligop- correspondence must be retained in olies, price fixing, cartels, trusts and Indonesia for 10 years. geographical designations of markets between suppliers. Small enterpris- A portion of profits must be retained es and cooperatives are exempt, as each year until a minimum reserve of are the production and marketing of 20% of issued capital has goods and services deemed “vital” to been attained. public welfare and state companies. Companies violating the law are sub-
17 Investment Window into Indonesia (IWI) | D. Taxation in Indonesia
D. Taxation in Indonesia
1. Tax incentives release of goods, redelivery of taxable ••Withholding tax on dividend distrib- Bonded Storage goods, lending of machinery, and entry uted to a non-resident shareholder Bonded Storage is a building, a site of excisable goods to and/or from the at 10%, unless the relevant tax treaty or a zone that meets certain require- bonded zone shall be granted facili- stipulates a lower rate. ments which is used for storage ties in the form of postponement of of goods for certain purposes and import duty, exemption from excise, In order to apply for the corporate obtains customs facilities. Bonded and/or non-collection of import taxes tax facilities, certain detailed require- Storage takes several forms, among (VAT, LGST, and Art.22). These facilities ments must be met including qualita- others, as described below. shall be provided to goods/ materials tive criteria, such as high investment entered into a bonded zone to be pro- value or export- oriented, high labour Bonded Warehouse cessed or combined with the absorption, and high local content. The A Bonded Warehouse is defined as products produced in a bonded zone, industry sectors that are eligible for a place of bonded storage to store or capital goods, including office equip- these income tax facilities are, among imported goods, which may be accompa- ment, to be used by an Entrepreneur in others, food; textile; chemicals and nied with one or more activities such as Bonded Zone (PDKB). Consumables are their products; plantation, forestry and packaging/ repackaging, sorting, kitting, not facilitated in a bonded zone. logging; coal and lignite mining; oil, packing, adjustment, or cutting of certain natural gas, and geothermal mining. goods within a certain period for later Application is required to obtain each removal. license and there are requirements that must be fulfilled in obtaining The imported goods or materials that the license. are introduced into a bonded ware- house by an Entrepreneur in Bonded Corporate Tax Facilities Warehouse may be granted facilities in Companies investing in certain indus- the form of postponement of import tries and/or in certain less developed duty, exemption from excise, and/or regions having high priority on a na- non-collection of import taxes (VAT, tional scale can be granted tax facilities LGST, and Art.22). These facilities shall in the form of: be provided to goods or materials ••Additional net income reduction, up introduced solely with the purpose of to a maximum of 30% of the amount supporting industry (manufacturing) at of investment in tangible fixed assets, other Indonesian customs territory or which shall be charged at 5% per bonded zone, or for re- export. annum for six years;
Bonded Zone ••Accelerated depreciation and amor- Bonded Zone is a place of bonded tisation; storage to store imported goods and/ ••The period of loss carry forward be- or local supplies for production purpos- ing extended up to ten years (certain es with its output primarily for export additional years can be given if the purposes. Import of goods, entry of taxpayer meets the requirements); taxable goods, delivery of products, and;
18 Investment Window into Indonesia (IWI) | D. Taxation in Indonesia
Tax Holiday Facility Certain requirements must be sat- is obtained (contractors of oil and gas Taxpayers making a new investment in isfied. The taxpayer shall submit the PSCs and companies operating under a pioneer industry but not entitled to application together with the applica- Mining Contracts of Work need only to Corporate Tax Facilities (as mentioned tion for registration of investment or provide notification). A change in the in the above paragraph) can obtain an no later than 1 year after the issuance method of bookkeeping is possible, exemption or a reduction of income of registration of investment. subject to pre-approval from the DGT. tax as mentioned in Article 18(5) of In- There is no statutory requirement for vestment Law No. 25 of 2007. The said Upon approval, the tax holiday facility an audit of ataxpayer’s accounts by a pioneer industries are defined as is only applicable to the income which public accountant for tax purposes. industries possessing broad linkages, is granted the facility. Other income However, if taxpayers do have audited giving added value and high externali- (such as capital gain, interest, dividend, accounts, the DGT requires them to be ty, introducing new technology, as well royalty, rental, debt waiver, revalua- submitted upon annual tax filing. as possessing strategic value for the tion, etc.) remains subject to tax in national economy. accordance with the prevailing tax Payment and filing regulations. Taxpayers that have both All taxpayers carrying out a business Those pioneer industries are: up- types of income stream are required or an independent profession must stream metals; crude oil and natural to maintain separate bookkeeping for maintain regular and proper account- gas purifying and/or refining; crude each income stream. ing records, on which periodic tax pay- oil, natural gas, or coal based petro- ments and reporting are based. Tax chemicals; basic inorganic chemicals; A taxpayer is only eligible for one type returns need to be filed based on type basic organic chemicals sourced from of tax facility (either Tax Allowance of taxpayer, business or transactions. agriculture, plantation, or forestry scheme or Tax Holiday scheme). products; raw materials for pharmacy; The DGT has enforced the use of the semi-conductor or other main comput- 2. Tax administration online e-Billing system for tax pay- er components; main components of Tax year ments replacing the previous hard-co- communication or health equipment; The tax year for a company is the py process. Taxpayers will have to gen- main components of industrial or accounting/financial year and calendar erate an e-billing code through certain certain automotive machinery; robotic year in the case of individual. system in order to facilitate their tax components; main vessel, aircraft or payment. The billing code is valid for train components; electricity gener- Administration, books and records certain period and will need to be given ation machinery; and/or economic Generally, books and records, includ- to the bank to execute a tax payment. infrastructure. Application for other ing those on computers, should be maintained in Rupiah currency and in Starting 2018, corporate taxpayer has the Indonesian language, and kept for the obligation to submit its periodic 10 years in Indonesia. Art. 21/26 income tax returns and periodic VAT returns in the form of For tax purposes, foreign investment electronic documents through DGT (PMA) companies, permanent estab- portal system. lishments, certain entities with for- eign affiliations and companies that Consolidated returns prepare their financial statements There is no provision for the filing of using the US dollar as the functional consolidated returns or for group relief. currency in accordance with Indo- nesia’s generally accepted financial Tax authorities accounting standards (PSAK Number Most taxes are administered central- 10) may maintain English language ly by the DGT, except regional taxes and US dollar bookkeeping, provided which are administered and collected approval from the Minister of Finance by regional governments, such as provinces and districts.
19 Investment Window into Indonesia (IWI) | D. Taxation in Indonesia
The DGT is a department under the 3. Business taxation Ministry of Finance that formulates Overview technical guidelines and procedures for The principal taxes applicable to fiscal policy. The DGT has various units companies doing business in Indone- that administer taxpayer obligations (e.g. sia are corporate income tax, branch monitoring tax compliance, collecting profits tax, withholding tax, value tax, counselling, conducting tax audits); added tax (VAT) and luxury goods sales these offices are classified as small, me- tax (LGST), and various other indirect dium and large tax offices. An account levies, such as tax on land/building, representative from the tax office is regional taxes and stamp duty. There assigned to serve each taxpayer. is no excess profits tax or alternative minimum tax. Rulings A taxpayer may request a confirma- Tax exemptions and various tax incen- tion from the DGT if the application of tives are available to qualified entities. the tax law and procedure is unclear. The main tax laws are the Income Tax There is no timeframe for the DGT Law, VAT and LGST Law, the Law on to respond to such a request. A tax General Tax Provisions and Proce- ruling applies only to the taxpayer that dures, the Land and Building Tax Law, filed the request and generally can be and the Law on Regional Tax and User used only to support that taxpayer’s Fees Bill. position in the event of a tax audit or tax objection. Such a ruling may not be used by other taxpayers.
20 Investment Window into Indonesia (IWI) | D. Taxation in Indonesia
Indonesia Quick Tax Facts for Companies
Corporate income tax rate 25%
Branch profit tax rate 20%
Capital gains tax rate 0.1% - 25%
Basis Worldwide
Participation exemption Yes
Loss relief
- Carryforward 5 years - Carryback No Double taxation relief Yes
Tax consolidation No
Transfer pricing rules Yes
Thin capitalization rules Yes
Controlled foreign company rules Yes
Tax year Calendar year or accounting/financial year
Advance payment of tax Yes
Return due date 4 months after end of calendar year/tax year (can be extended to six months by notification to the DGT) Withholding tax
- Dividens 20% (non-resident); 10%/15% (resident) - Interest 20% (non-resident); 15%/20% (resident) - Royalties 20% (non-resident); 15% (resident) - Technical Service fee 20% (non-resident); 2% (resident) - Branch profit tax 20% Capital tax No
Social security contributions (employer 10.2%-11.7% contribution) Land and building tax 0.3%-0.5%
Land and building acquisition duty 5%
Transfer tax 0.1% (transfer of shares listed on Indonesian stock exchange); 5% (transfer of non-listed resident company’s shares by a non-resident); 0%/1%/2.5% of gross proceeds (transfer of land and/or buildings) Tax on founder shares at initial public offering 0.5%
Stamp duty IDR 3,000/IDR 6,000
VAT 10%
21 Investment Window into Indonesia (IWI) | D. Taxation in Indonesia
Residence Certain types of income earned by Capital gains taxation A company is considered resident resident taxpayers or Indonesian PEs Capital gains are taxable as ordinary for tax purposes if it is established or of foreign companies are subject to a income, and capital losses are deduct- domiciled in Indonesia or if its place of final income tax. The tax withheld by ible. However, the sale of shares listed effective management is in Indonesia. third parties is deemed to be the final on the Indonesian stock exchange is settlement of the income tax for the subject to a tax of 0.1% of the trans- Taxable income and rates particular type of income. action value. Founder shares also are Resident companies are taxed on subject to an additional final tax of worldwide income. Nonresident Taxpayers engaged in certain business 0.5% on the share value at the time of companies are taxed only on Indone- sectors, such as construction and an initial public offering, regardless of sia-source income, including income shipping, pay income tax at a fixed whether the shares are held or sold attributable to a permanent establish- percentage of gross income. following the offering. ment (PE) in Indonesia. Companies engaged in the upstream The sale or transfer of land and/or The standard corporate income tax oil and gas industry generally are re- buildings is generally subject to a 2.5% rate is 25%. quired to calculate corporate income final income tax on the sales pro- tax in accordance with a relevant ceeds. Different rates apply for certain Small-scale entrepreneurs whose production sharing contract (PSC), and transactions i.e. sale or transfer of low gross income for the fiscal year does the income tax calculation for certain cost houses/apartments by real estate not exceed IDR4.8 billion are subject companies engaged in mining is gov- company (1%) and transfer to the gov- to a 0.5% tax on gross revenue for erned by the contract of work. The tax ernment for the public interest (0%). certain period of time. provisions for oil and gas, geothermal, and sharia-based industries are stipu- Income derived from the sale of Resident corporate taxpayers with lated separately through government non-listed Indonesian shares held by gross revenue between IDR4.8 billion or Ministry of Finance regulations. foreigners is taxable at a rate of 5% of and IDR50 billion receive a 50% reduc- the gross proceeds, unless the rate is tion in the corporate tax rate imposed Debt-to-Equity Ratio reduced under a tax treaty. on the taxable income that is attrib- Starting from fiscal year 2016, the utable to gross revenue up to IDR4.8 Minister of Finance has introduced Branch Profit Tax billion. A public company with at least an implementing regulation on A branch of a foreign company in 40% of its total paid-up shares traded debt-to-equity ratio. A certain portion Indonesia is taxed at the standard on a stock exchange in Indonesia and of interest arising from debt is non tax corporate income tax rate, and a 20% that complies with other requirements deductible if the debt-to-equity ratio branch profit tax is levied on taxable can obtain a 5% reduction in the in- exceeds 4:1. This regulation does not income after income tax. A relief on come tax rate. apply to certain industries (e.g. those the branch profit tax rate is available subject to the final tax regime, infra- if so provided under a tax treaty. An PEs are subject to a branch profits tax structure, banking, insurance, financ- exemption from branch profit tax may of 20% (or a lower rate under a tax ing). This rule applies to both related be available if all the net profits of a treaty) on net after-tax profits, in addi- and non-related debt, whether the PE are reinvested in Indonesia in the tion to the 25% corporate income tax debt is obtained domestically or from form of: rate. An exemption from branch prof- abroad. In addition, taxpayers with for- its tax applies if all of the PE’s net profit eign private debt must submit a report after tax is reinvested in Indonesia. to the tax authority.
22 Investment Window into Indonesia (IWI) | D. Taxation in Indonesia
••A capital contribution in a newly Double taxation relief established company domiciled in Unilateral relief Indonesia as a founder or a member Resident companies deriving income of the founders; from foreign sources are entitled to a unilateral tax credit for foreign ••A capital contribution in an existing tax paid on the income. The credit is company established and domiciled limited to the amount of Indonesian in Indonesia; tax otherwise payable on the relevant ••Fixed assets to be used by the PE to foreign income. A country-by-country do business or conduct activities of limitation applies, i.e. the credit for the PE in Indonesia; or foreign tax paid on income from one ••Investment in intangible goods to be country is limited to the amount of used by the PE to do business or con- Indonesian tax otherwise payable on duct activities of the PE in Indonesia. the income from the same country. Indonesia does not grant credit for Compliance underlying tax. A foreign company carrying out busi- ness activities through a PE in Indone- Tax treaties sia generally has the same compliance Indonesia has a reasonably broad obligations as a resident taxpayer. A tax treaty network, with the treaties foreign company that does not have generally following the OECD model a PE settles its Indonesian tax obliga- treaty and containing OECD-compliant tions on Indonesian-source income exchange of information provisions. when an Indonesian taxpayer with- Treaties generally provide for relief holds income tax. from double taxation on all types of income, limit the taxation by one coun- Tax collection operates under a try of companies resident in the other, self-assessment system. For taxpayers and protect companies resident in one that subject to the ordinary tax regime, country from discriminatory taxation in monthly tax instalments is due on the the other. 15th day of the following month and must be filed by the 20th of the To claim relief under a tax treaty, following month. the foreign taxpayer must fulfil the substance and administrative require- The annual corporate tax return must ments. The substance requirements be filed within four months of the end entail general conditions to be met, of the book year but could be extend- and if the foreign taxpayer receives ed for two months with notification to income for which the article in the the DGT. Annual corporate tax liability relevant tax treaty stipulates a bene- (income tax liability less monthly in- ficial owner requirement (i.e. interest, stalments and/or other prepaid taxes) dividend, royalty), additional conditions must also be satisfied (please refer to “General anti-avoidance rule” section). For the administrative requirement, the foreign taxpayer must complete and submit to the DGT in a timely manner,
23 Investment Window into Indonesia (IWI) | D. Taxation in Indonesia
a specific document issued by the an attachment to the completed Form ••It has fixed and non-fixed assets, Indonesian Tax Office in lieu of a Cer- DGT-1 or Form DGT-2. Treaty relief will sufficient and adequate to carry on tificate of Domicile, and Form DGT-1 or be denied if the foreign taxpayer fails business activities in the DTA partner Form DGT-2. Form DGT-2 is specifically to fulfil any of the requirement. state or partner jurisdiction other for a company that is a banking insti- than the assets that generate income tution, pension fund, or earns income Anti-avoidance rules from Indonesia; from bonds or stocks listed on the In- General anti-avoidance rule ••It has employees with certain exper- donesian stock exchange. These forms While Indonesia does not have a gen- tise in accordance with the business must be endorsed by the tax authori- eral anti-avoidance rule, the foreign field that is carried out, in sufficient ties of the treaty partner country. If the income recipients must satisfy certain and adequate numbers; and foreign taxpayer is unable to obtain substance requirements to obtain the endorsement, the foreign taxpayer benefits under a tax treaty, as follows: ••It has activities or other active busi- can use any form of Certificate ness other than only receiving income ••There is a relevant economic motive of Domicile commonly verified or in the form of dividend, interest and/ for establishment of the entity; issued by the tax treaty partner’s tax or royalty originating from Indonesia. authorities, provided certain require- ••Its business activities are managed ments are met. This form will serve as by its own management and the management has sufficient authority to carry out transactions;
Indonesia Tax Treaty Network
Algeria Hong Kong New Zealand Suriname
Armenia Hungary Norway Sweden
Australia India Pakistan Switzerland
Austria Iran Papua New Guinea Syria
Bangladesh Italy Philippines Taiwan
Belgium Japan Poland Thailand
Brunei Darussalam Jordan Portugal Tunisia
Bulgaria Korea (DPRK) Qatar Turkey
Canada Korea (ROK) Romania Ukraine
China Kuwait Russia United Arab Emirates
Croatia Laos Seychelles United Kingdom
Czech Republic Luxembourg Singapore United States
Denmark Malaysia Slovakia Uzbekistan
Egypt Mexico South Africa Venezuela
Finland Mongolia Spain Vietnam
France Morocco Sri Lanka Zimbabwe
Germany Netherlands Sudan
24 Investment Window into Indonesia (IWI) | D. Taxation in Indonesia
The tax authority considers that mis- Failure to satisfy even one of the con- PMK-213 does not revoke PER-32 or use of the treaty provisions occurs in ditions may jeopardize the eligibility to PER-43. Therefore, some provisions in the event that the main objective or enjoy treaty benefits. PER-43 or PER-32 are still applicable one of the main objectives of arranging as long they have not been further the transactions. Transfer Pricing stipulated in PMK- 213. The DGT requires that related-party is to receive the treaty benefit and con- transactions or dealings with affiliated Based on this new regulation, taxpay- flicts with the purpose and objective of companies (including profit sharing by ers having related party transactions establishing the treaty. multinational companies) be carried and meeting any one of the following If a foreign taxpayer receives income out in a “commercially justifiable way” thresholds/conditions are required to for which the article in the relevant tax and on an arm’s length basis. The most prepare the Master File and Local File. treaty stipulates a beneficial owner appropriate transfer pricing method requirement, the following additional must be used. conditions must also be satisfied: In order to provide detailed guidelines A. For an individual foreign taxpayer, on transfer pricing matters, the DGT he/she does not act as an agent or promulgated regulations No. PER-43/ nominee; or PJ/2010 (“PER-43”) and PER-32/PJ/2011 B. For a corporate foreign taxpayer, it (“PER-32”) regarding the application does not act as an agent or nom- of arm’s length principle in related inee, or conduit, which must fulfil party transactions. More recently, the the following provisions: Minister of Finance issued regulation ••Has control to use or enjoy funds, No. 213/ PMK.03/2016 (“PMK-213”) assets or rights that bring in effective from 30 December 2016 to income from Indonesia; implement the three-tiered approach to transfer pricing documentation to ••Not more than 50% of its income support the initiative by OECD on BEPS is used to fulfil obligations to Action 13. The three-tiered documen- other parties; tation approach refers to Master File, ••Bears risks of the assets, capital, Local File and Country-by-Country and/or its liabilities that it owns; Report (CbCR). and
••Does not have an obligation, writ- ten or unwritten, to provide part or all of the income received from Indonesia to another party.
Item Threshold Gross Revenue in the preceding tax year Exceeding Indonesian Rupiah (IDR) 50,000,000,000 (fifty billion Rupiah) Tangible goods transactions in the preceding tax year Exceeding IDR20,000,000,000 (twenty billion OR Rupiah) Services, Royalties, Interest or other transactions in the preceding tax year Exceeding IDR5,000,000,000 (five billion Rupiah) Related party transactions with affiliated party located in a jurisdiction with tax rate lower Any value than Indonesia (i.e. currently at 25%)
25 Investment Window into Indonesia (IWI) | D. Taxation in Indonesia
PMK-213 confirms that taxpayers who Where the Parent Entity is located in a Controlled Foreign Companies do not meet the above threshold to foreign jurisdiction, the resident taxpay- (CFC) Rules maintain Master and Local Files must er is required to submit the CbCR when A CFC is a foreign company in which an still adhere to the arm’s length princi- the country of the Parent Entity: Indonesian resident company or an in- ple for related party transactions. The dividual holds, either direct or indirect, •• Does not require submission of regulation also states that the Master at least 50% of the total paid-in capital CbCR; or File and Local File must be available or voting rights (either alone or togeth- within four months after the end of the ••Does not have an agreement with er with other resident taxpayers), with tax year and must be accompanied by a the Government of Indonesia on the 50% threshold criterion applied at letter, signed by the party providing the exchange of information; or each level. The CFC rules apply only to TP documentation, confirming the date ••Has an agreement but the CbCR can- unlisted foreign companies. Indonesia from which the documents are available. not be obtained by the Government does not have a white or black list of of Indonesia. countries. If the CFC rules apply, the The Master File and Local File must Minister of Finance is authorized to de- be submitted upon request within the The CbCR is to be based on the data termine when a dividend is deemed to time specified under the provisions of and information available up to the end be derived by the Indonesian resident tax laws and regulations. The reports of the Tax Year. If this condition is not shareholder if no actual dividends are must be in the local language (Bahasa satisfied, the taxpayer shall be deemed declared. If no dividends are declared Indonesia).Reports submitted late will not to apply the arm’s length principle. or derived from the offshore company, not be considered and additional pen- the resident taxpayer must calculate alties may apply for noncompliance. The regulation also stipulates that and report the deemed dividend in its the CbCR must be available within 12 tax return. PMK-213 also requires taxpayers to (twelve) months after the end of the The dividend is deemed to be derived file a summary of the Master File and tax year. The first year of coverage is either in the fourth month following Local File as an attachment to the financial year 2016 and the report is the deadline for filing the tax return in corporate tax return in the format required to be filed with the Annual the offshore foreign country, or seven prescribed. The summary contains a Corporate Tax Return for the subse- months after the foreign company’s declaration that the Master File and quent Tax Year i.e. Tax Year 2017. tax year ends if the country does not Local File meet the minimum content have a specific tax filing deadline. requirements and provides the date The CbC report is required to be pre- on which the Master File and Local pared in the form/format prescribed as File became available. The summary is an attachment to PMK-213. The format in addition to the Special Attachment is broadly aligned with the CbC report Forms (Forms 3A/3A-1 and Forms template prescribed in BEPS Action 13 3B/3B-1). with certain additional requirements.
A CbC report must be prepared and The Indonesian Ministry of Finance submitted by a taxpayer that quali- has also issued regulations on Mutual fies as the parent entity of a business Agreement Procedure (“MAP”) and group having consolidated gross reve- Advance Pricing Agreements (APA) as nue of at least IDR11 trillion. part of the alternate dispute resolution mechanism.
26 Investment Window into Indonesia (IWI) | D. Taxation in Indonesia
Indirect Sale or Transfer or Pur- Exchange of Information of tax evasion. The CRS provides for chase of Indonesian Shares Regulation the exchange of nonresident finan- The sales or transfer of shares of a Exchange of Information (EOI) between cial account information with the tax conduit company (SPC) owning Indo- countries can be carried out to assist authorities in the account holders’ nesian shares located in a tax haven each country in identifying any tax country of residence. Participating country by a non-Indonesian tax avoidance or tax evasion scheme, and jurisdictions that implement Automatic resident can be deemed as a sale of to expedite cross-border tax dispute Exchange of Information (AEOI) send shares of the Indonesian party by the resolution. EOI should be carried out and receive pre-agreed information non-Indonesian tax resident insofar as based on provisions stipulated in: each year, without having to send a there is a special relationship between specific request. A. DTA/Tax Treaty the SPC and the Indonesian party. Tax haven country is defined as a country B. Tax Information Exchange Agree- Indonesia, as one of the participating that has a corporate tax rate 50% low- ment (TIEA) countries, is expected to conduct the er than that of Indonesia or a country C. Convention on Mutual Administra- first information exchange by 2018. In that does not have a provision for ex- tive Assistance in Tax Matters preparation for the AEOI, financial in- change of information with Indonesia. stitutions have been instructed by the D. Multilateral or Bilateral Competent Ministry of Finance to release certain The indirect purchase of shares or Authority Agreement financial information for tax purposes assets of an Indonesian taxpayer by E. Intergovernmental Agreement to the tax office, with sanctions for another Indonesian party through an those who do not comply. F. Other Bilateral or Multilateral entity established especially for such Agreement purpose can be stipulated as the purchase of shares or assets by the The OECD has developed a Common other Indonesian party if the SPC has Reporting Standard (CRS) for the au- a special relationship with the other tomatic exchange of tax and financial Indonesian party and where there is information at a global level, with the unreasonable pricing. intention of reducing the possibility
27 Investment Window into Indonesia (IWI) | D. Taxation in Indonesia
Indonesia’s Participation in OECD’s Base Erosion and Profit Shifting (BEPS) Projects Although Indonesia is not a member of the OECD (Organization for Economic Co-operation and Development) countries, Indonesia is a member of the G-20 countries and therefore Indonesia has fully participated in BEPS projects both as an ob- server and as a contributor. The following table summarizes the steps Indonesia has taken to date to implement the BEPS recommendations:
Action Implementation VAT on business to customers digital services Not yet known. (Action 1) Hybrids (Action 2) Not yet known.
CFCs (Action 3) Indonesia already has CFC rules but limited only to dividend.
Interest deductions (Action 4) A local thin capitalization rule is based on a debt: equity approach (balance sheet test), as opposed to the fixed or group ratio recommended by BEPS. Harmful tax practices (Action 5) Not yet known.
Prevent treaty abuse (Action 6) Indonesia already has a rule to prevent treaty abuse.
Permanent establishment status (Action 7) Not yet known.
Transfer pricing (Actions 8-10) Regulations issued in 2013 require taxpayers to prove the role of parties in developing intellectual property, in line with the OECD transfer pricing guidelines, to align the allocation of taxable income with value creation. It is not yet known whether additional measures in line with actions 8-10 will be implemented. Disclosure of aggressive tax planning (Action 12) Not yet known.
Transfer pricing documentation (Action 13) The Ministry of Finance has introduced the three-tiered level of documentation requirement for tax years commencing on or after 1 January 2016.The requirements are broadly in line with the action 13 recommendations, with additional information requirements in both the master file and local file.The documents must be prepared in Bahasa, Indonesia and made available within four months from the end of the tax year. There are also new thresholds for determining the documentation requirements and the inclusion of domestic related parties within the scope of the transfer pricing rules. CbC reporting (Action 13) CbC reporting has been introduced in line with action 13 requirements, with certain additional details and applies for tax years commencing on or after 1 January 2016. The CbC report must be available within 12 months from the end of the tax year and must be filed with the annual corporate tax return for the subsequent tax year.
Where the parent entity is located in a foreign jurisdiction, the resident taxpayer must submit the CbC report when the country of the parent entity:
•• Does not require the submission of a CbC report; or
•• Does not have an exchange of information agreement with the Indonesian government; or
•• Has an agreement but the CbC report cannot be obtained by the Indonesian government.
Further implementing guidance is expected to be issued by the tax authorities with regard to CbC filing.
Indonesia is one of the countries that signed a multilateral competent authority agreement for the automatic exchange of CbC reports.
Dispute resolution (Action 14) Not yet known.
Multilateral instrument (Action 15) Indonesia signed the Multilateral Convention to Implement Tax Treaty- Related Measures to Prevent Base Erosion and Profit Shifting (MLI) on 7 June 2017 and provided its “MLI position” (a list of reservations and notifications). Among others, Indonesia has provisionally chosen PPT plus Simplified Limitation on Benefit (LOB).
28 Investment Window into Indonesia (IWI) | D. Taxation in Indonesia
Taxes on certain businesses not preclude other forms of return on The treatment on income and expenses Corporate tax for sharia business an investment, such as rent or profits as specified in the Income Tax Law also Generally, the fundamental characteris- that the parties agree on at the time applies to sharia-based business activities tic in which Islamic finance differs from they enter into the contract. In relation in the same manner as for convention- traditional finance is that the charging to sharia-compliant products, most al banking/financial services (mutatis or paying of “interest” is prohibited. discussion of Islamic finance concerns mutandis). The income tax treatment of Although sharia law prohibits the about the various investments arising sharia banking and sharia financial ser- charging or paying of interest, it does from the prohibition on interest. vice can be summarized as follows:
Sharia banking
Income recipient Type of income Tax treatment
Bank Bonus, profit sharing and margins from Treated as interest transactions of facilitated customers Treated in accordance with the normal Other income income tax regulation for the relevant transaction Investor/depositor customer Bonus, profit sharing and any other income Treated as interest from funds entrusted and placed offshore through an Indonesian sharia bank or an Treated in accordance with the normal Indonesian branch of an offshore sharia bank income tax regulation for the relevant transaction Other income
Sharia financial services
Type of transaction Tax treatment
Leasing (Ijarah) Normal operating lease, and the leased asset is non-depreciable Financial lease Similar to a financial lease with option, (Ijarah Muntahiyah Bittamlik/IMB) and the leased asset is non-depreciable Factoring (Wakalah bil Ujrah) Gain or profit is treated as interest
Consumer financing (Murabahah, Salam, Istishna) Gain or profit margin is treated as interest
Other Sharia financing Fees or other income is treated in accordance with the normal income tax regulation for the relevant transaction Corporate financing from investor (Mudharabah, Mudharabah Musytarakah, Musyarakah) Gain or profit sharing is treated as interest
Delivery of assets (deemed to be directly delivered from supplier to end user) Treated in accordance with the normal income tax regulation for the relevant transaction
29 Investment Window into Indonesia (IWI) | D. Taxation in Indonesia
Tax on oil and gas contracts in the The PSC contractors generally will re- In January 2017, the Government upstream business cover operating costs out of produc- introduced the Gross Split PSC regime Oil and gas activities are controlled by tion. If in any calendar year the oper- in order to incentivise the petroleum the state and conducted by the gov- ating costs exceed the value of crude activities. A fundamental change in ernment as the holder of the mining oil or gas produced, the unrecovered this PSC is that total gross production authority. The most common form of excess may be carried forward and is split between the Government and cooperation contract is a production recovered in subsequent years until Contractor and consequently there is sharing contract (PSC). An entity can the end of the contract. The remaining no allocation of production for First only enter into one PSC or have a par- crude oil and natural gas will then be Tranche Petroleum (FTP), cost recovery, ticipating interest in one PSC, and that shared between the government and or profit share as in the traditional PSC. entity must obtain a tax registration the PSC contractors according to the number (“ring fence principle”). Under production sharing splits agreed in the ring fence principle, exploration the contract. PSC contractors have to fulfil local costs or losses incurred by an entity (domestic) content requirements. that enters into a PSC cannot be trans- The “uniformity principle” is adopt- In general, this means that the PSC ferred, used or carried over by another ed by the upstream operation. This Contractors cannot import goods, entity under another PSC. principle provides that the treatment equipment or services unless these of deductible costs for tax purposes is are not available in Indonesia. Con- A cooperation contract generally will identical to the costs recovered by the sequently, often a foreign provider override the general principles of PSC contractors from the government cannot enter into a contract directly Indonesian income tax law, because within the framework of the PSC, and with a PSC Contractor so, in a number these contracts have the status of lex vice versa. of cases, the foreign service provider is specialis. Reference to the general tax subcontractor of or collaborates with a laws will be made only on matters not The upstream contractors are sub- domestic service provider to enter into specifically covered in the contract. ject to corporate tax and final tax on a contract with the PSC Contractor. after-tax profits (i.e. branch profit Investment and expenditure incurred tax). The corporate tax and branch Vendors and service providers under a PSC must be approved by the profit tax rates of PSCs concluded Certain providers to PSC and mining government. The contractor recovers before Government Regulation (GR) contractors, such as construction, ship- the costs it incurred to carry out the No. 79/2010 was issued refer to the ping, etc. typically are taxed on a certain exploration and exploitation activities Income Tax Law prevailing on the date percentage of gross revenue. Other in line with the work plan and bud- the PSCs were signed and remain valid midstream and downstream providers get and the authorization of financial throughout the life of the PSCs. For are generally taxed based on profits. expenditure approved by the govern- contracts signed after GR-79/2010, the ment (“cost recovery” mechanism). PSC contractor can opt to either apply Tax on general mining the income tax rates that prevailed at Before 2009, foreign investors estab- the time the contract was signed or lished local subsidiaries to enter into follow the changes in tax rates as they contracts of work with the Indone- occur over time.
30 Investment Window into Indonesia (IWI) | D. Taxation in Indonesia
sian government for the exploration Offshore drilling companies and exploitation of coal and mineral Foreign oil and gas drilling service resources. Similar to the cooperation companies are taxed at a deemed 15% contract in the upstream oil and gas profit level of gross revenue (which industry, a contract of work generally results in a 3.7% effective income tax will override the general principles of rate, taking into account the deemed Indonesian tax law; reference to the profit level). Domestic oil and gas drill- general tax laws will be made only on ing service companies are taxed under matters not specifically mentioned in the general tax regime. the contract. Local content PSC contractors have to fulfil local Depending on the generation of the (domestic) content requirements. contract, the taxation provisions of In general, this means that the PSC the contract of work usually stipu- Contractors cannot import goods, late the corporate tax calculation on equipment or services unless these profits (such as corporate tax rates, are not available in Indonesia. Con- deductible expenses, etc.) and other sequently, often a foreign provider tax obligations that will remain valid cannot enter into a contract directly throughout the life of the contract. with a PSC Contractor so, in a number Other contracts may be subject to of cases, the foreign service provider is the general principles of the tax law. subcontractor of or collaborates with a A detailed analysis of each contract is domestic service provider to enter into necessary to determine the applica- a contract with the PSC Contractor. ble tax treatment of a specific mining contract. Contract-based mining concessions are no longer available following the introduction of Law on Mineral and Coal Mining No. 4/2009. A foreign investor can operate a mining concession through a Mining Business License (Izin Usaha Pertambangan or “IUP”). IUP holders are taxed under the general tax regime.
31 Investment Window into Indonesia (IWI) | D. Taxation in Indonesia
4. Taxes on individuals
Indonesia Quick Tax Facts for Individuals
Income tax rates 5% - 30%
Capital gains tax rates 0.1% - 30%
Basis Worldwide income
Double taxation relief Yes
Tax year Calendar year
Return due date 31 March
Withholding tax (applicable for Indonesia sourced income)
Dividends 10% (for resident); 20% (for non-resident)
Interest 15%/20% (for resident); 20% (for non- resident
Royalties 15%
Net wealth tax No
Social security 1% - 4%
Inheritance tax No
Land and building tax 0.3%
Land and building acquisition duty 5%
Transfer tax 0.1% (transfer of shares listed on Indonesian stock exchange); 5% (transfer of non-listed resident company’s shares by a non-resident); 0%/1%/2.5% of gross proceeds (transfer of land and/or buildings) Tax on founder shares at initial public offering 0.5%
VAT 10%
Residence Taxable income in the form of cash. Benefits in kind Residents are defined as individuals Personal income taxes in Indonesia are (e.g. medical benefits, company cars) who are domiciled in Indonesia, pres- levied only at the national level. Taxable received by employees are not taxable ent in Indonesia for 183 days or more income includes employment income, on the employee (or deductible for in any 12-month period, or intending income from the exercise of a business the employer). Employment income in to reside in Indonesia. Non-resident or profession and other income, such Indonesia is subject to tax, regardless taxpayers are individuals present in as passive income (dividends, interest, of where the income is paid. Indonesia for fewer than 183 days and royalties), capital gains, etc. Bene- without intention to reside in Indone- fits-in-kind received by employees are Tax relief is available for contractors sia. Non-residents are not required to not, in most cases, taxable to the em- and suppliers under grant-funded gov- register for tax purposes. ployee (or deductible for the employer). ernment projects, although taxes apply The benefits-in- kind could be subject on their personnel, subcontractors, to tax if they are provided by certain sub consultants and sub suppliers. Taxable income and rates categories of employer. Resident individual taxpayers are taxed on their worldwide gross in- Employment income includes salaries come, less allowable deductions and and wages, bonuses, commissions, non-taxable income. Non-resident overseas allowances, and fixed allow- individuals are taxed only on Indone- ances for education, housing allow- sian-source income. ance and medical care allowance given
32 Investment Window into Indonesia (IWI) | D. Taxation in Indonesia
Deductions and reliefs Deductions are generally available for expenses incurred in generating income.
Basis of deduction Deductible amount (per year) Taxpayer IDR54,000,000
Spouse IDR4,500,000 (additional IDR 54,000,000 for a wife whose income is combined with the husband’s) Dependents IDR4,500,000 each (up to a maximum of three individuals related by blood or marriage)
Occupational support 5% of gross income, up to a maximum of IDR6,000,000
Pension cost (available to pensioners) 5% of gross income, up to a maximum of IDR2,400,000
Contribution to approved pension fund, e.g. BPJS Amount of personal-contribution Manpower Compulsory tithe (“zakat”) or religious Actual amount, provided that valid supporting evidence is available and all requirements are contributions met
The Minister of Finance is authorized to re-determine the amounts of the personaldeductions.
The social security contributions payable by employed resident individuals are 2% of monthly compensation to the old age savings plan, 1% to the pension plan and a 1% health care contribution (subject to a monthly compensation cap). An em- ployee may add other family members, but he/she will be liable to make anadditional 1% contribution per family member per month. The contribution to thepension plan is not mandatory for expatriates.
Rates
Taxable Income Rate(1) Up to IDR50,000,000 5% Over IDR50,000,000 but not exceeding IDR250,000,000 15% Over IDR250,000,000 but not exceeding IDR500,000,000 25% Over IDR500,000,000 30%
Dividends received from Indonesian additional tax of 0.5% applies to the Inheritance and gift tax companies are subject to a 10% final share value of founder shares at the Indonesia does not levy inheritance or WHT. Payments to nonresident indi- time of an initial public offering. Gains gift tax. viduals in the form of salary, dividends, on the disposal of land and/or build- Net wealth tax interest, royalties, rents for property, ings are generally taxed at a final 2.5% Indonesia does not levy a net wealth tax. prizes or awards and payments for of the transaction value. The transfer technical, management and other of a nonlisted resident company’s Compliance services wherever performed, are shares by a nonresident is subject Indonesia operates a self-assessment subject to a 20% WHT, subject to any to WHT of 5% of the transfer value, system, under which all resident reduced rates under a tax treaty. For- unless an exemption applies under a taxpayers (including expatriates) are eign-source interest income received tax treaty. required to register for tax purposes by a resident is taxed at standard in- and to declare their worldwide income, come tax rates. Interest on Indonesian Small-scale entrepreneurs whose busi- assets and liabilities. The forms are bonds is subject to final tax at 15%. ness earnings do not exceed IDR4.8 Form 1770 (for resident taxpayers with billion within a fiscal year are subject business income), Form 1770-S (for Individual capital gains generally are to a 0.5% tax on gross revenue for resident taxpayers who receive income taxed as income at the normal rates; certain period of time. from employment and other income) gains on shares listed on the Indone- and Form 1770-SS (for resident tax- sian stock exchange are taxed at 0.1% payers with annual gross income not (final tax) of the transaction value. An exceeding IDR60 million).
33 Investment Window into Indonesia (IWI) | D. Taxation in Indonesia
Resident taxpayers may need to pay Penalties are imposed for late pay- monthly tax installments. The annual ment of tax, late filing of returns, tax return must be filed no later than underpayment of tax and voluntary 31 March of the year following the amendment of returns. The penalty income year. The return can be filed varies depending on the situation, directly with the tax office where the but the most common penalty is 2% taxpayer is registered, or through monthly interest on tax underpaid. “drop boxes.” 5. Indirect taxes If an individual only receives employ- Value added tax ment income, the employer withholds VAT is levied at each stage of the tax on behalf of the employee, and an production and distribution chain and employee whose income is under the is levied on the supply of goods and nontaxable income threshold is not the provision of services at a standard required to file an annual return. The rate of 10%. VAT on exports of taxable employer must calculate and withhold goods and certain taxable services is income tax on the salary on a month- zero rated. Zero-rated export services ly basis and pay the tax to the State are limited to: toll manufacturing Treasury on the individual’s behalf, and services; repair and maintenance then report to the tax office. services attached to or for movable goods utilized outside the Indone- Self-employed individuals must make sian customs area; and construction monthly advance tax payments based services attached to or for immovable on the previous year’s tax liability. Each goods located outside the Indonesian payment is due on the 15th day of the customs territory. month following the income month. Individual taxpayers who conduct a VAT applies to intangible goods business or independent profession (including royalties) and to virtually all with turnover up to a certain thresh- services provided outside Indonesia old may elect to be exempt from the to Indonesian businesses (i.e. im- bookkeeping requirement and only ported services). VAT applies equally maintain records of revenue. to all manufactured goods, whether produced locally or imported. Manu- In that case, taxable income is as- facturing is defined as any activity that sessed based on deemed profits. changes the original form or nature of a good, creates a new good, or Married women are exempt from the increases its productivity. This includes requirement to register for tax purpos- fabricating, cooking, assembling, pack- es, as they will fulfill their tax obligation ing and bottling. jointly with their husband. A family is considered a single economic unit and The VAT on inputs is creditable against separate filing is allowed only if there the VAT on outputs subject to certain is a pre-nuptial agreement between requirements. Overpayments of VAT husband and wife. may either be carried forward, or be recovered but only after a tax audit Nonresidents are taxed only on Indo- has been carried out. Claims for VAT nesian-source income, with the tax refund can only b made at the end of withheld at source by the a tax year, except for certain VATable Indonesian payer. Entrepreneurs that are eligible to claim tax refund at each monthly period.
34 Investment Window into Indonesia (IWI) | D. Taxation in Indonesia
VAT incentives are available in the form invoices, including replacement and of VAT exemption, deferred, or not cancellation, must be generated via an collected for certain imports or pur- electronic system designated by the chases, including: DGT, denoted in Indonesian Rupiah (IDR) and signed electronically. ••Strategic goods, such as machinery, factory equipment, etc; Monthly VAT return is due by end of the ••Raw materials for processing by com- following month, and any VAT liability panies inside a Bonded Zone; (VAT output less VAT input) should be ••Delivery and/ or import of taxable settled before the submission. Self-as- goods into a Free Trade Zone; sessed VAT on utilisation of intangible goods or service subject to VAT from ••Import of foods and/ or materials for abroad within the Indonesian customs processing, assembling, or install- area is due by 15th of the month fol- ing on other goods for the purpose lowing month it becomes payable. of export by a manufacturer that obtains NIPER (ID number for KITE Indonesia does not have a VAT group- exemption facility) ing concept. If a company has one or ••Imports and delivery of services, more branches situated in different tax equipment, and other supplies re- office jurisdictions, the company can file quired to perform a project financed a request for centralization of VAT pay- by foreign aid; ment and filing of the VAT returns. The centralization usually is made by the ••Imports and purchases made by main/head office, but it can also be cen- companies in certain industries such tralized at the level of an active branch, as national shipping or airline com- provided certain criteria are met. panies, etc;
••Import of certain goods which duty is VAT returns must be submitted exempted. monthly, by the end of the following month, while the monthly VAT pay- Entrepreneurs whose annual sales of ment deadline is before the VAT return taxable goods and/or taxable services is filed. The deadline for payment of exceed IDR4.8 billion are required to self-assessed VAT on the utilization of register for VAT purposes and issue taxable intangible goods or services a VAT invoice on the delivery of those from abroad is no later than the 15th goods and services. day of the month following the time when the VAT becomes due. A VAT invoice is an instrument to levy VAT (for the seller) and to claim Capital tax VAT credit (for the buyer). All VATable There is no capital tax. entrepreneurs are required to supply e-VAT invoices. Entrepreneurs must Real estate tax first obtain an activation code and Land and building tax is payable annu- password and also request an elec- ally on land, buildings and permanent tronic certificate, either from the tax structures. The rate is maximum 0.3% office where they are registered of the estimated value of the property. or through the DGT website. The e-VAT A certain non-taxable amount of the
35 Investment Window into Indonesia (IWI) | D. Taxation in Indonesia
sales value is excluded from this tax. tion value or the NJOP, whichever is lower or totally eliminated. Currently, The sale of land and/or buildings by the highest, is payable when a person Indonesia has preferential tariffs in the an individual (other than the sale of obtains rights to land or a building with following schemes: a simple house and basic apartment a value greater than IDR60 million. A. ASEAN Trade in Goods Agreement by taxpayers whose main business Various exemptions apply, including on (ATIGA): This is a preferential tariff is the transfer of land or buildings) is transfers in connection with a merger based on an agreement between subject to a tax of 2.5% of the gross and transfers to relatives. Indonesia and ASEAN countries. proceeds. Exemptions are granted for This tariff is applicable for the im- the transfer of land and/or buildings as Stamp duty port of goods from ASEAN coun- part of a grant or inheritance and the Stamp duty applies to financial trans- tries into Indonesia. sale of land valued at less than IDR60 actions, deeds and receipts, at the million by an individual taxpayer whose minimum rate is IDR3,000 and the B. ASEAN-China FTA (ACFTA): This is annual income does not exceed the maximum is IDR6,000, depending on an agreement between the ASEAN non-taxable income threshold. the amount of the transaction and countries to build a free trade area type of document. with China. China refers to the A land and building acquisition duty of Mainland and excludes the Special maximum 5% is payable when a person Customs and excise duties Administrative Regions (Hong Kong obtains rights to land or a building with Any goods coming from overseas into and Macau) and Taiwan a value greater than the non-taxable the Indonesian customs territory are C. ASEAN-Korea FTA (AKFTA): This is threshold, which maximum is up to treated as “imports” and generally are an agreement between the ASEAN IDR80 million. A taxpayer who receives subject to import duty and import tax- countries and South Korea to build such rights by way of inheritance is es. The importer must obtain Import the economic partnership between entitled to a non-taxable threshold of a and Custom Registration Number. The the countries. minimum of IDR350 million. process is now much faster through the online system: D. Indonesia-Japan Economic Part- Transfer tax nership Agreement (IJEPA): This is The sale of shares listed on the Indo- New establishment PMA company, af- an agreement between the gov- nesian stock exchange is subject to a ter obtaining Articles of Incorporation ernments of Indonesia and Japan tax of 0.1% of the transaction value. (“AOI”) and Ministry of Law and Human to build the economic partnership Founder shares also are subject to a Rights (“MOLHR”) approval, must sub- between the two countries, and final tax of 0.5% on the share value at mit the Business Registration Number increase trade and investment in the time of an initial public offering, (“NIB/Nomor Induk Berusaha) through both countries. regardless of whether they are held or OSS (Online Single Submission) sys- E. ASEAN-Australia-New Zealand FTA sold following the offering. tem. The application submitted already (AANZFTA): This is an agreement mentioned that Company need Import between ASEAN countries to build The transfer of a resident company’s and Custom Registration Number. The a free trade area with Australia and shares by a non-resident is subject to Import License and Custom Registra- New Zealand. a withholding tax equal to 5% of the tion Number will be issued together F. ASEAN-India FTA (AIFTA): This is transfer value, unless otherwise pro- with the NIB. an agreement between ASEAN vided under a tax treaty. countries to build a free trade area Certain suspension apply (e.g. goods with India. Certain disposals of land and/or build- in a bonded zone or warehouse and ings are subject to a final tax of 2.5% of goods in an import facility for export G. Indonesia-Government of Islamic the transaction value. purposes).Preferential tariff rates are Republic of Pakistan, stipulation of extended to countries that have signed import duty tariff: This stipulation A land and building acquisition duty Free Trade Agreements (FTA) and Eco- is made within the framework of of a maximum of 5% of the acquisi- nomic Partnership Agreements (EPA). the Preferential Trade Agreement This means that customs duties for between Indonesia and the Gov- selected imported goods that originate ernment of the Islamic Republic of from the FTA/EPA partner countries are Pakistan.
36 Investment Window into Indonesia (IWI) | D. Taxation in Indonesia
H. ASEAN-Japan Comprehensive Eco- least 25% of the capital of the payer The employers and employees are nomic Partnership (AJCEP). company and the dividends come required to contribute to the general from retained earnings), which rep- social security schemes (please refer Excise duties are also imposed on resents an advance payment of the to section “Labour Environment” for certain goods as part of the govern- company’s tax liability. A 10% final more details). ment’s effort to curb the distribution WHT is imposed on dividends paid to a of such goods in Indonesia. A number resident individual. Other transactions of excise duties are levied, primarily on Fees for technical services remitted alcohol and tobacco products. Interest abroad are subject to a 20% WHT, unless Interest paid to a nonresident is sub- the rate is reduced under a tax treaty. Customs duty and import taxes pay- ject to a 20% WHT, unless the rate is ables should be settled before goods reduced by a tax treaty. A 2% WHT applies on domestic pay- are released from the customs area ments made for technical, manage- (port). If the goods are excisable, duty Interest paid by a domestic taxpayer to ment, consulting and certain services, payable should also be settled before a resident generally is subject to a 15% as well as rentals (except for land and the excisable goods are released from WHT, which represents an advance building rentals, which are subject to the port. Failure to comply can give payment of the tax liability. Interest a 10% final withholding tax). The rates rise to an administrative penalty de- paid to a resident bank or financial are doubled for taxpayers who do not pending on the amount of underpay- institution is exempt from WHT. have a tax identification number. ment; the maximum penalty is 1000% Interest paid by Indonesian banks of the underpayment. and Indonesian branches of foreign Compliance banks to a tax resident is subject to a The collection of tax on dividends, Environmental taxes final 20% tax for both companies and interest, royalties, rentals, professional The central government does not individuals. service fees, technical and manage- have any specific environmental taxes. ment service fees, construction service However, in certain regions, a permit Royalties fees, etc. is via withholding at source. If to dump liquid waste into certain wa- A 20% WHT is imposed on royalties re- the recipient is an Indonesian resi- ter resources is subject to a user fee mitted abroad, unless the rate is reduced dent, the tax withheld is considered a collected by the regional government. under a tax treaty. For tax purposes, roy- payment on account of the recipient’s alties include any charge for the use of year-end tax liability, but if the recipi- Luxury Goods Sales Tax property or know-how in Indonesia and ent is a non-resident, the tax withheld A luxury goods tax is levied in addition the transfer of a right to use property or represents a final tax. Tax withheld to VAT on a variety of goods at rates know-how in Indonesia. from dividend, interest, royalty and ranging from 10% to 125%. The tax other payments must be paid on the is levied upon importation or, in the Royalties paid by a domestic taxpay- 10th day of the calendar month follow- case of manufacturing, at the time of er to a resident are subject to a 15% ing the tax assessment month. the delivery of the luxury goods by the WHT,which represents an advance producing company. payment of the tax liability. Payment of income tax that has been deducted from employees’ wages and 6. Withholding taxes Wage tax/social security contribu- vendors must be paid by the 10th Dividends tions day of the following calendar month. Dividends paid to a nonresident are The employer is responsible for cal- Reporting is due by the 20th of the subject to a 20% WHT, unless the rate culating, deducting and remitting tax following month. is reduced under a tax treaty. The tax due on employees’ salaries and other is considered a final tax. remuneration. The employer must file Dividends paid by a domestic corpo- an employment withholding tax return rate taxpayer to a resident company or on a monthly basis. cooperative are subject to a 15% WHT (unless the participation exemption applies – i.e. the recipient holds at
37 Investment Window into Indonesia (IWI) | E. Audit and Compliance
E. Audit and compliance
An entity that conducts business in 2. Currency 4. Audit Requirements Indonesia is required to maintain ac- An entity prepares its accounting ••The following types of entities are counting records and to prepare annual records and financial statements by required to submit annual financial financial statements in accordance with using its functional currency. Howev- statements that are audited by a the Statements of Financial Accounting er, an entity may present its financial qualified auditor: Standards (“PSAK”) published by the statements using a currency other Financial Accounting Standards Board of than its functional currency (presenta- ••Publicly-listed companies. the Indonesian Institute of Accountants tion currency). The functional currency ••Banks, insurance, and other compa- (“DSAK- IAI”). is the currency of the primary eco- nies involved in accumulating funds nomic environment in which the entity from the public. The entity must maintain a register of operates. This is often the currency in shareholders, as well as a special register which sales prices for its goods and ••Companies issuing debt instruments. for members of the board of directors services are denominated and settled. ••Companies with assets of 50 billion and commissioners and their family Rupiah or more members, detailing share ownership 3. Language, accounting basis and ••Bank debtors whose financial state- within Indonesia. Changes of share own- standards ments are required by the bank to ership must be recorded in the register An entity shall prepare its financial be audited. of shareholders and the special register. statements, except for cash flow The board of directors must submit an information, using the accrual basis of •• Certain types of foreign entities en- annual report to a general meeting of accounting. Under the accrual basis of gaged in business in Indonesia that are shareholders within six months of the accounting, the effects of transactions authorized to enter into agreements. closing of the company’s books. The are recognized when they occur. In •• Certain types of state-owned report must contain at least the following: addition, an entity recognizes items as enterprises. (1) audited financial statement and (2) a assets, liabilities, equity, income, and report on the condition and performance expenses when their definitions and of the company. recognition criteria are satisfied.
1. Accounting period An entity’s accounting records and annu- The accounting period for an entity is al financial statements shall comply with normally 12 months and it generally uses SAK issued by DSAK-IAI. Entities that have the 1 January to 31 December calendar no public accountability are allowed to year as the accounting year. However, an adopt the SAK for Entities that Have No entity is allowed to choose an accounting Public Accountability (SAK ETAP), which is year that does not start with 1 January. simpler than the full SAK. For tax purposes, the fiscal year in most cases is also the calendar year. Similar to the accounting year, an entity is also al- lowed to choose a fiscal year, which does not start with 1 January.
38 Investment Window into Indonesia (IWI) | E. Audit and Compliance
Audits are conducted in accordance observe and comply with the relevant with the Indonesian Auditing Stan- independence rules issued by the dards promulgated by the Indonesian regulator (i.e. Ministry of Finance) Institute of Certified Public Accoun- including independence regulations tants (IICPA). Public companies are re- issued by OJK for auditors of entities quired to submit their audited financial under OJK regulations, such as listed statements within three months after company, bank, insurance, finance the end of the annual financial state- company, pension fund and other ments period to the capital market financial services institutions. regulator - Otoritas Jasa Keuangan/ Financial Services Authority (OJK). The OJK’s regulation No. 13/ For interim financial statements, sub- POJK.03/2017 stipulates mandatory mission to OJK should be conducted rotation of the Public Accountant for within one month after the date of every 3 years with 2 years cooling interim financial statements if not au- period. This mandatory rotation only dited; within two months if statements applies to the Public Accountant, and are reviewed; otherwise, within three not the Public Accounting Firm. months if the statements are audited.
5. Independence The Indonesian Auditing Standards require auditors to maintain their inde- pendence, to comply with the auditor’s code of ethics, and to avoid potential conflict of interests when conducting audit. Moreover, auditors should also
39 39 Investment Window into Indonesia (IWI) | F. Labour Environment
F. Labour environment
1. Employee rights Union, employers’ associations and and remuneration academia. Wage levels have been Manpower Law No. 13 of 2003 gov- increasing over the past few erns the bargaining power of workers, years in line with inflation. District-level specifies minimum standards for work- minimum wages can be substantially ing conditions, and sets rules for sev- higher than provincial wages. erance and compensation payments. Although the law recognizes workers’ Wages include a minimum wage, right to strike, it also restricts strike overtime pay, sick pay and holiday pay. action, including a requirement that Cash wages must constitute 75% of the strikes be legal, orderly and peaceful. minimum wage, with the remainder typically allotted for food and transport. Indonesia has ratified the main con- Foreign firms typically start employees ventions of the International Labour at salaries that are double the mini- Organization (ILO), including conven- mum wage. Most local firms pay rates tions on the rights of assembly and slightly above the minimum wage. collective negotiation; on equal wages for men and women for the same Fringe benefits include annual holi- work; and on forced labour, freedom days (typically 12 days a year) and paid of association and protection of the leave for national holidays, religious rights of association. ILO Convention obligations, family obligations (includ- 138 on the minimum age for employ- ing marriage), paid maternity leave, ment is incorporated in Indonesian and sick leave. Severance compensa- law, and ILO Convention 182 on the tion is required upon termination or elimination of the worst forms of child retirement. Employees receive a one labour was ratified and incorporated month’s bonus as a Religious Festival into law in 2000. Allowance (THR). The extra month salary is to be paid before Lebaran The government has issued several (end of Ramadhan) for Muslims, before regulations that expand or modify Christmas for Christians, before Nyepi labour laws, including decrees on the Day for Hindus, and before Buddha’s employment of foreigners, occupation- Enlightenment Day for Buddhists. al health and safety, work competency standards, and overtime standards Pensions and social insurance and pay. There are currently two types of social security (BPJS) program: BPJS Man- 2. Wages and benefits power and BPJS Health Care. Premium Provincial wage councils set minimum for both programs is paid by both the wage levels for each province and employer and employee. for each of the districts within the province. These councils comprise The new BPJS Manpower scheme came representatives from the Ministry of into effect on 1 January 2014 but in Manpower, the All-Indonesia Workers’ general it continues the previous social
40 40 Investment Window into Indonesia (IWI) | F. Labour Environment
security or Jamsostek and the premi- without a severance-pay settlement Foreigners must have level of educa- um will remain the same as Jamsostek agreed between the employee and tion in line with the requirement for premium, i.e. 0.2% to 1.7% (by employ- employer. If an agreement cannot be the position being applied; having a er) for workers accident Insurance, reached, the employer must obtain the certificate of competency, or having at 0.3% (by employer) for life insurance, approval of the Ministry of Manpower. least 5 years of work experience which and 3.7% (by employer) and 2.0% (by is relevant to the position being applied employee) for retirement plan. Severance payments consist of one to to work in Indonesia and must have an nine times the employee’s last monthly Indonesian counterpart (except for di- The health care scheme replaces the salary (depending on the length of ser- rector or commissioner positions). The old healt hcare scheme and will be vice), and (after at least three years of general ratio is 1:1 (one expatriate to fully mandatory by 1 January 2019. service) a gratuity payment at double one Indonesian counterpart), however The premium is 5% of the employ- the employee’s last monthly salary. this could vary depends on the type of ee’s monthly salary (4.0% is paid by Other entitlements upon termination legal entity and the industry. Copy of the employer and 1.0% is paid by the of employment include cash payments Indonesia ID card and job description employee). The cap for the employee’s for accrued annual leave, and housing of the Indonesian counterpart needs monthly salary used to determine the and medical benefits equal to 15% of to be attached to the expatriate’s work premium amount is two times the the severance and gratuity payments. permit application. Indonesian tax exemption amount (married with one child), or currently 4. Labour-management relations Firms must submit an expatriate IDR8,000,000/month. The mandatory Labour contracts are common, and utilization plan (RPTKA) to the Minis- premium will cover husband, wife, and typically cover employees who enter try of Manpower before inviting the two children. Additional family mem- a firm within a certain time period. expatriates for working. Mandatory bers can be covered with additional Contracts can be renewed for one to report and staff welfare report are premium. Under the current regula- three years. Collective bargaining is required to be attached in the RPTKA tion, participants also include foreign typically conducted at the company application. The RPTKA application workers (expatriates) who work for at level if a union represents or gains the should state all positions to be filled by least six months in Indonesia (must approval of at least 51% of the work- expatriates during a one-year period, hold valid work/ stay permit). force. Labour disputes are addressed the qualifications for each position, by a special provincial-level commer- and plans for training Indonesian staff. Other benefits cial court. During renewal process, the company Individual negotiations or collective should provide a report which proves bargaining determine other fringe ben- 5. Employment of foreigners that the expatriate has transferred the efits. These usually include family and Employment of foreigners is allowed knowledge to the Indonesian coun- cost-of-living allowances, free medical only in positions that Indonesians terpart. The ministry grants individual care (including dental care) for the cannot fill and only if regular and work permits based on approved employee and his/her family, housing, systematic training is provided so that manpower plans. transport, and work clothes. Many Indonesians can eventually replace firms offer pension schemes. Senior the expatriates. There are normally no Approval for work-permit applications executives often receive additional difficulties in obtaining permission to can take up to three months. benefits such as a company car and employ foreign managers and techni- All positions for expatriates working in annual home leave. cians if the government Indonesia need approval from the Min- believes no Indonesians are available istry of Manpower’s Office for Place- 3. Termination of employment to fill the positions. However, foreign- ment of Foreign Workers. There are legal restraints on the dismiss- ers are not eligible to fill certain posi- al of a worker who has been employed tions (e.g. personnel managers). continuously for at least three months. Foreigners fall into four classes: pro- Even if a production cutback is need- fessionals, managers, supervisors and ed or the worker is deemed unfit, the technicians/operators. Work permits employer may not discharge the worker are required for all four classes.
41 41 Investment Window into Indonesia (IWI) | About Deloitte
About Deloitte
Deloitte provides audit & assurance, most complex business challenges. De- environment of continuous learning, consulting, financial advisory, risk loitte’s more than 286,000 profession- challenging experiences, and enriching management, tax and related services als are committed to making an impact career opportunities. Deloitte’s profes- to public and private clients spanning that matters. Deloitte serves 4 out of 5 sionals are dedicated to strengthening multiple industries. With a globally Fortune Global 500® companies. corporate responsibility, building pub- connected network of member firms lic trust, and making a positive impact in more than 150 countries, Deloitte Deloitte’s professionals are unified in their communities. brings world-class capabilities and by a collaborative culture that fosters high-quality service to clients, delivering integrity, outstanding value to markets the insights they need to address their and cultural diversity. They enjoy an
Approximately
people in more than 150 countries 286,000 globally across 725 offices $43.2bn global revenues in FY18 Approxiately 8,800 professionals and 340 partners in 25 offices across Southeast Asia 58,000 77,000 people hired globally in FY18 staff and partners in Asia Pacific
42 Investment Window into Indonesia (IWI) | About Deloitte
About Deloitte Southeast Asia Deloitte Indonesia now has over 80 Deloitte Southeast Asia Ltd – a mem- Partners & Directors and over 1,200 Staff, ber firm of Deloitte Touche Tohmatsu located in Jakarta and Surabaya, serving Limited comprising Deloitte practices companies listed in the Indonesian stock operating in Brunei, Cambodia, Guam, exchanges as well as multinational and Indonesia, Lao PDR, Malaysia, Myan- large national enterprises, public institu- mar, Philippines, Singapore, Thailand tions, and fast growing companies. and Vietnam – was established to deliver measurable value to the partic- We have diversified client base which ular demands of increasingly intra-re- includes major multinationals, large gional and fast growing companies national enterprises, public insti- and enterprises. tutions, local important clients and successful fast growing global compa- Comprising 340 partners and 8,800 nies. Deloitte Indonesia clients come professionals in 25 office locations, from major industries such as banking the subsidiaries and affiliates of & finance, manufacturing, transporta- Deloitte Southeast Asia Ltd combine tion, technology, media, telecommu- their technical expertise and deep nications, retail & wholesale, oil & gas, industry knowledge to deliver consis- mining, and life science & health care. tent high quality services to compa- nies in the region. The client service team comprising part- ners, practitioners and support staff, help About Deloitte Indonesia create powerful business solutions with In Indonesia, Deloitte is represented integrated approach combines insight by the following: and innovation from multiple disciplines using business knowledge and industry ••Satrio Bing Eny & Rekan, Registered depth with the breadth of professional Public Accountants expertise to help clients exceed their ex- ••Deloitte Touche Solutions (DTS), Tax pectations in the complexity of the global Consulting business environment. ••PT Deloitte Konsultan Indonesia (DKI), Financial Advisory and Risk Advisory Services
••KJPP Lauw & Rekan (Valuation Advi- sory)
••Hermawan Juniarto & Partners, Lawyers
••PT Deloitte Consulting
43 Investment Window into Indonesia (IWI) | Contacts
Contacts
Claudia Lauw Lie Hoeng Country Leader [email protected]
Audit Risk Advisory Yoon Young Jun Technical Advisor Satrio Kartikahadi Brian Johannes Indradjaja +62 21 5081 9199 Assurance & Advisory Leader Risk Advisory Leader [email protected] [email protected] [email protected] Bae Sung Eun Bing Harianto Budiyanto Technical Advisor [email protected] [email protected] +62 21 5081 9215 [email protected] Eny Indria [email protected] Consulting Japanese Services Group Iwan Atmawidjaja Tax Consulting Leader Fenny Widjaja [email protected] Japanese Service Group Leader Melisa Himawan +62 21 5081 8102 Tax Leader [email protected] [email protected] Chinese Services Group Koji Sugimoto Roy David Kiantiong Dennis Li Yu Ying Technical Advisor [email protected] Technical Advisor +62 21 5081 8829 +62 21 5081 9216 [email protected] John Lauwrenz [email protected] [email protected] Keisuke Okubo Hartono Laksana Widjaya Technical Advisor Financial Advisory +62 21 5081 9240 +62 21 5081 8117 [email protected] [email protected] Edy Wirawan Financial Advisory Leader [email protected] Korean Services Group Bang Chi Young Winawati Widiana Technical Advisor [email protected] +62 21 5081 8191 [email protected] Maria Christi Pratiwi [email protected]
44 Investment Window into Indonesia (IWI) | Contacts
Satrio Bing Eny & Rekan Deloitte Touche Solutions PT Deloitte Konsultan Indonesia KJPP Lauw & Rekan Hermawan Juniarto & Partners PT Deloitte Consulting
Jakarta Surabaya The Plaza Office Tower 32nd Floor Gedung Bumi Mandiri Jl. M.H. Thamrin Kav 28 – 30 10th Floor （Room 1003-04） Jakarta 10350, Indonesia Jl. Jend. Basuki Rachmat 129-137 Tel: +62 21 5081 8000 Surabaya 60271, Indonesia Fax: +62 21 2992 8200, 2992 8300 Tel: +62 31 532 4342, 546 0888 Fax: +62 31 547 7800 The Plaza Office Tower 27th Floor Tel: +62 21 5081 9555 Fax: +62 21 2992 8022 Email: [email protected] www.deloitte.com/id
45 Investment Window into Indonesia (IWI) | A. Introduction into Indonesia
46 Investment Window into Indonesia (IWI) | A. Introduction into Indonesia
47 Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”), its global network of member firms, and their related entities. DTTL (also re- ferred to as “Deloitte Global”) and each of its member firms and their affiliated entities are legally separate and independent entities. DTTL does not provide services to clients. Please see www.deloitte.com/about to learn more. Deloitte is a leading global provider of audit and assurance, consulting, finan- cial advisory, risk advisory, tax and related services. Our network of member firms in more than 150 countries and territories serves four out of five Fortune Global 500® companies. Learn how Deloitte’s approximately 286,000 people make an impact that matters at www.deloitte.com.
Deloitte Asia Pacific Limited is a company limited by guarantee and a member firm of DTTL. Members of Deloitte Asia Pacific Limited and their related entities provide services in Australia, Brunei Darussalam, Cambodia, East Timor, Fed- erated States of Micronesia, Guam, Indonesia, Japan, Laos, Malaysia, Mongolia, Myanmar, New Zealand, Palau, Papua New Guinea, Singapore, Thailand, The Marshall Islands, The Northern Mariana Islands, The People’s Republic of China (incl. Hong Kong SAR and Macau SAR), The Philippines and Vietnam. In each of these, operations are conducted by separate and independent legal entities.
Deloitte Asia Pacific Limited is a company limited by guarantee and a member firm of DTTL. Members of Deloitte Asia Pacific Limited and their related entities provide services in Australia, Brunei Darussalam, Cambodia, East Timor, Fed- erated States of Micronesia, Guam, Indonesia, Japan, Laos, Malaysia, Mongolia, Myanmar, New Zealand, Palau, Papua New Guinea, Singapore, Thailand, The Marshall Islands, The Northern Mariana Islands, The People’s Republic of China (incl. Hong Kong SAR and Macau SAR), The Philippines and Vietnam. In each of these, operations are conducted by separate and independent legal entities.
About Deloitte Indonesia In Indonesia, services are provided by Deloitte Touche Solutions, PT Deloitte Konsultan Indonesia, and KJPP Lauw & Rekan.
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