The Minister of Finance recently issued Regulation No. 169/PMK. 010/2015 (the "Regulation") on the ratio of debt to equity in a company's capital (debt-to-equity ratio / "DER") for tax calculation purposes. This is significant as Law No. 7/1983 on Income Tax, as last amended by Law No. 36/2008, provides that interest expenses are deductible in the calculation of a company's tax liabilities.
The Regulation, which enters into effect in fiscal year 2016, sets the DER at 4:1, meaning that interest expenses arising on borrowings incurred to provide company capital will no longer be deductible for tax purposes where such borrowings exceed 80 percent of the company's capital.
We recently issued a Client Update on this. To view the Update, click here.
Law No.33 of 2014 on Hala Product Assurance makes halal certification mandatory in Indonesia for the first time. The legislation provides for the establishment of a new body, the Halal Assurance Agency (accountable to the Minister for Religious Affairs) within a period of not more than three years of the legislation’s enactment to administer certification, which is required for food and beverages, medicines, cosmetics, and chemical, biological, and genetically-engineered products that are manufactured, imported, distributed and / or traded in Indonesian.
Halal certification was previously the responsibility of the non-governmental Indonesia Ulema Council ("MUI"). Until such time as the new agency has been established, the MUI will continue to be responsible for certification, and all halal certificates issued by the MUI theretofore will remain valid. Failure to comply with the certification requirement carries a maximum fine of up to Rp. 2 billion or a term of imprisonment of not more than five years. The certification scheme must be fully operational within five years' of the legislation’s enactment, that is, by not later than 29 September 2019.
A new Ministry of Finance Regulation (No. 80/PMK.01/2015) provides an administrative framework for the enforcement of judicial and arbitral awards against the Indonesian state for the first time, at least in theory. In the past, the question of whether or not to comply with such awards was entirely at the discretion of the government. Crucially, however, the Regulation specifically excludes awards related to matters that fall within the scope of the duties and functions of government.
The Indonesian Commodities Trading Supervisory Board (Bappeti) has issued a new regulation (No. No. 104/BAPPEBTI/SE/07/2015) that expressly exempts commodity futures trading from the provisions of Bank Indonesia’s controversial Regulation 17/3/PBI/2015 (requiring the mandatory use of rupiah in payment transactions).
To better ensure the speedy administration of justice, Supreme Court Reg. No.2/2015 establishes a new small-claims procedure for tort and contract claims of less than Rp 200 million. The new procedure is greatly simplified, with the exchange of documents being confined to the plaintiff's claim and a reply from the defendant. By contrast, in regular civil proceedings, a somewhat archaic and expensive system of formalized pleading continues to be applied.
