The Indonesian government, through a presidential regulation, recently amended the regulation concerning the Ratification of the Convention On Mutual Administrative Assistance In Tax Matters. Such regulation was previously regulated under Presidential Regulation No. 159 of 2014 but now has been amended by Presidential Regulation No. 56 of 2024 (Decree No. 56/2024). Decree No. 56/2024 has been effective as of 22 April 2024.
In short, the key intention of Decree No. 56/2024 is to provide regulations on (i) reciprocal cooperation between the Indonesian government and the partnered country/jurisdiction based on the Convention on Mutual Administrative Assitance in Tax Matters and (ii) withdrawal of declaration that has been determined by the Indonesian government through notification (written statement or according to the international regulations). The main goal is to maximize the State income from the tax sector.
This publication will highlight the updates under Decree No. 56/2024.
Assistance in Recovery of Tax Claims
Previously, through Decree No. 159/2014, Indonesia declared its reservations to not provide any form of assistance in the recovery of any tax claims. However, with the issuance of Decree No. 56/2024, Indonesia limits its reservation on assistance in recovery only to certain types of taxes. This means that other than certain types of taxes that are reserved by the Indonesian government, the Indonesian government is open to cooperation with the other partnered country/jurisdiction for tax claims recovery.
Types of the Reserved Taxes
The types of taxes that are reserved by the Indonesian government (meaning that the government has a right to refuse assistance in recovery of tax claims) – are:
- Taxes on income, profits, capital gains or net wealth which are imposed on behalf of political subdivisions or local authorities of a party,
- Compulsory social security contributions payable to general government or to social security institutions established under public law,
- Taxes in other categories, except customs duties, imposed on behalf of a party, namely:
A. estate, inheritance, or gift taxes,
D. specific taxes on goods and services such as excise taxes,
E. taxes on the use of ownership of motor vehicles,
F. taxes on the use or ownership of movable property other than motor vehicles,
G. any other taxes,
- Taxes in categories referred to in sub-paragraph iii. above which are imposed on behalf of political subdivisions or local authorities of a party.
Other than the abovementioned types of taxes, the Indonesian government is open to cooperation with the partnered country/jurisidiction for the recovery of tax claims. This means that the Indonesian government is open to cooperation in the recovery of tax claims concerning among others private individual income tax, immovable assets tax, and VAT.
Conclusion
Decree No. 159/2024 shows that the Indonesian government is now willing to cooperate with tax recovery claims for some types of taxes. This means that it will also open more opportunities for the Indonesian government to pursue domestic tax claims abroad as the provision of assistance adopts a reciprocal approach. In this regard, it is expected that the government would also earn more State revenue from the payable tax.
For Further Information, Please Contact:
MetaLAW, Legal Consultant, Jakarta, Indonesia
general@metalaw.id
1 Peraturan Presiden No. 159 Tahun 2014 tentang Pengesahan Convention on Mutual Administrative Assistance in Tax Matters (Konvensi tentang Bantuan Administratif Bersama di Bidang Perpajakan)
2 Peraturan Presiden No. 56 Tahun 2024 tentang Perubahan atas Peraturan Presiden No. 159 Tahun 2014 tentang Pengesahan Convention on Mutual Administrative Assistance in Tax Matters (Konvensi tentang Bantuan Administratif Bersama di Bidang Perpajakan)
