Draft Bill on the Restriction of Hard-Cash Transactions
Due to the fact that hard-cash transactions are prone to be used as a means of money-laundering and other criminal activities, the government and the House are currently discussing the Draft Bill on the Restriction of Hard-Cash Transactions. In a nutshell, this Draft Bill prohibits any hard-cash transactions with values of above IDR 100 million from being undertaken in Indonesia, with a number of exemptions to this restriction also being described. All agreements which set out such hard-cash transactions will therefore subsequently be considered null and valid. Moreover, the carrying of foreign banknotes in certain amounts will require the acquisition of permits issued by Bank Indonesia if this Draft Bill is ultimately passed by the House.
Disclosure of Financial Information for Tax Purposes
The government has finally enacted Government Regulation in Lieu of Law No. 1 of 2017 on Access to Financial Information for Tax Purposes. This regulation sets out the main legal framework for the implementation of Automatic Exchanges of Financial Information (AEoI) in order to ensure compliance with the various tax provisions set out under the prevailing laws and regulations, as well as various tax treaties which are applicable to Indonesia. In order to achieve this, the regulation sets provisions which relate to the following areas: (1) Access to financial information for tax purposes and exemptions to the secrecy obligation; (2) Obligation to report financial information and the identification process and submission mechanisms; (3) Immunity rights for parties implementing the AEoI obligations; and (4) Criminal sanctions.
Submission of Foreign-Customer Taxation-Related Information Further Regulated
The Financial Services Authority has issued Circular Letter No. 16/SEOJK.03/2017 on the Submission of Foreign-Customer Taxation Information for the Purpose of the Automatic Exchange of Information Through Common Reporting Standards. This circular sets out a number of provisions which address the following areas: (1) Reporting by financial institutions which are subject to the Automatic Exchange of Information obligation; (2) The classification of foreign customers whose information must be reported; (3) Identification of foreign customers and their willingness to submit their taxation information; and (4) Reporting mechanisms for reportable or undocumented accounts.
OJK Updates Guidelines for the Implementation of Anti-Money-Laundering and Prevention-of-Terrorism-Financing Programs Within the Financial-Service Sector
In a bid to combat money-laundering and terrorism-financing activities, the Financial Services Authority (OJK) has issued Regulation No. 12/POJK.01/2017 on the Implementation of Anti-Money-Laundering and Prevention-of-Terrorism-Financing Programs Within the Financial Sector. This new regulation codifies and strengthens provisions relating to this matter and applies to all financial services providers. Previously, these matters were regulated through four different regulations, specifically: (1) Bank Indonesia (BI) Regulation No. 12/20/PBI/2010; (2) BI Regulation No. 14/27/PBI/2012; (3) OJK Regulation No. 22/POJK.04/2014; and (4) OJK Regulation No. 39/POJK.05/2015.
OJK Regulates Premiums and Benefits for Pension Funds
The Financial Services Authority has issued Regulation No. 5/POJK.05/2017 on Premiums, Benefits and Other Benefits Organized by Pension Funds in an attempt to improve the organization of pension funds within Indonesia. In general, this regulation sets out a number of provisions which relate to the premiums, pension benefits and other types of benefit which may be offered by pension funds which are either established and organized by employers or which are established and organized by banks and life-insurance companies.
Foreign OTT Providers to Be Classified as Permanent Establishments
Endless efforts have been made by the Indonesian government to raise tax revenue from the profits which are generated by so-called over-the-top players. More recently, the Director General of Tax issued Circular Letter No. SE-04/PJ/2017 on the Determination of Permanent Establishments for Foreign Tax Subjects Which Are Providers of Applications and/or Content Services Through the Internet in a bid to classify Foreign OTT Providers as BUT which can be considered tax subjects under Indonesian taxation laws and regulations.
OJK Introduces Provisions on the Stipulation of Supervision Status and Follow-Up Measures for Commercial Banks
In a bid to improve the supervision of commercial banks and also as a follow up to Law No. 9 of 2016 on the Prevention and Control of Financial-System Crises, the Financial Services Authority has issued Regulation No. 15/POJK.03/2017. This new regulation sets out a new set of guidelines for the stipulation of supervision statuses and relevant follow up activities for commercial banks, which are now divided into systematically important banks and non-systematically important banks.
Payment and Reporting of Income Tax from the Transfer of Real Estate under Collective-Investment Contract Schemes
In order to implement Article 5 of Government Regulation No. 40 of 2016 on Income Tax for Income Deriving from the Transfer of Real Estate under Certain Collective-Investment Contract Schemes, the Ministry of Finance has issued Regulation No. 37/PMK.03/2017, which sets out further provisions relating to the payment of income tax incurred as a result of the transfer of real estate under certain collective-investment contracts, as well as procedures for reporting such payments to tax-service offices. This new regulation repeals and replaces Ministry Regulation No. 200/PMK.03/2015 which was the previous framework that addressed these matters.
Government Simplifies Customs Registration
In order to implement Article 27 of Ministry of Finance Regulation No. 179/PMK.04/2016 on Customs Registration, the Director General of Customs and Excise has issued Regulation No. PER-04/BC/2017 on Guidelines for the Implementation of Customs Registration. In essence, this regulation simplifies a number of provisions which relate to customs registration. These provisions were previously set out under: (1) Director General Regulation No. PER-10/BC/2014 on Guidelines for the Implementation of Customs Registration; and (2) Director General Regulation No. P-25/BC/2010 on Guidelines for the Implementation of Customs Service Business Registration.
New Methods for Exchanges of Tax-Related Information
As we approached the end of the tax-amnesty program, the Ministry of Finance had issued Regulation No. 39/PMK.03/2017 on Procedures for the Exchange of Information Based on International Treaties with the main goal of ensuring better tax enforcement across Indonesia. In this context, the new regulation updates the information-exchange framework which was originally regulated under Ministry Regulation No. 60/PMK.03/2014 on Information Exchange and Ministry Regulation No. 125/PMK.010/2015 as its amendment. The updates encompass the elimination of the obligation to secure consent from customers as regards the provision of tax-related information, as well as other additional measures designed to ensure a more effective exchange of information, especially information which relates to foreign corporations and their group companies.