Page 1 - Newsletter (An Update on CbC Reporting Regulations in Indonesia)

DDTC Tax Newsletter 02 I Jan 2018

An Update on CbC Reporting

Regulations in Indonesia

Clarification on the definition of
On 16 January 2018, the Directorate General of Tax
“Parent Entity”
(“DGT”) released DGT Regulation No. 29/PJ./2017 (“PER-
29”), although the regulation is dated on 29 December
2017. It has been approximately a year since the release
In addition to the other criteria of “parent entity” in
of MoF-213 that the CbC Reporing implementing
MoF-213, PER-29 adds that a parent entity is an entity
regulation is finally published by the DGT through PER-
that is not owned directly or indirectly by another entity
29. Nevertheless, PER-29 has succeeded in providing
in the group or is owned directly or indirectly by another
much clarity to the implementation of CbC Reporting
entity, however the said other entity is no required to
requirement that has not been clarified sufficiently
consolidate its financial statements.
yet in MoF-213. As part of Indonesia’s commitment to
the implementation of the standard, the Ministry of The criteria of “parent entity” is important as this
Finance released on 30 December 2016, Minister of will determine the obligation to prepare and file an
Finance Regulation No. PMK-213/PMK.03/2016 (“MoF CbC Report, namely those “parent entities” that have
213/2016”), the much-anticipated regulations on CbC a consolidated revenue more than IDR 11 trillion or an
reporting and its corresponding updates to transfer equivalent to EUR 750 million. While domestic taxpayers
pricing documentation requirements. MoF 213/2016 that are member entities of a multinational group, whose
brings clarity to the transfer pricing documentation legal “parent entity” is located offshore, are only obliged to file
framework. Previously, transfer pricing documentation a CbC Report domestically in Indonesia if the said parent
requirements are only regulated by way of Directorate entity is located in a jurisdiction that does not require
General of Tax (“DGT”) Regulations, which is not CbC Reporting, or does have a exchange of information
mandated directly by the Law. agreement with Indonesia, or have CbC Reporting
requirement and a exchange of information agreement
In general, PER-29 has brought the Indonesia but effectively the CbC Report unobtainable by the DGT.
CbC Reporting requirements more in line with the
international standard as issued by the OECD in BEPS
Action 13. The following are salient features of PER-29.