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On 20 February 2018, the Supreme Court of Indonesia and the Ministry of Foreign Affairs (Kementerian Luar Negeri / "MoFA") signed Memorandum of Understanding No. PRJ/HI/102/02/2018/01, No. 01/NK/MA/2/2018 (the "MoU") which renews the prior MoU concerning Judicial Assistance in Civil Matters dated 19 February 2013. The renewal of such MoU is important due to the increasing number of requests from Indonesian courts to send court documents in civil matters (i.e, court summons, notice of decision) to foreign courts and vice versa. The important points to take note of include:
- Supreme Court Document Verification – Given that a recipient country may have its own requirements for judicial assistance in civil matters, the Supreme Court Registrar must first examine and verify the documents from the Court of First Instance before forwarding them to MoFA. In some recipient countries, failure to translate the documents would cause the documents to be denied and returned to the requesting country.
- Time Limit – Prior to the new MoU, it took two to three months to summon a party domiciled abroad. It was also difficult for the parties to know the status of the request. The new MoU and the Cooperation Agreement between the Supreme Court and MoFA is silent as to the time frame within which judicial assistance in overseas civil matters are carried out. Despite this, parties may refer to MoFA's Rogatory Online Monitoring website ("Rom Website") to track the process of court summons or document requests.
- Fees – The previous practice was for the disputing parties to pay only the fees incurred in sending documents from the court to MoFA. The new MoU now requires the disputing parties to pay all fees needed to process the document, i.e. fees to be incurred from sending letters to overseas parties, to transmitting the documents from overseas to the Indonesian court.
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The Minister of Finance ("MoF") issued new guidelines for the calculation of gross turnover during a tax audit, under MoF Regulation No. 15/PMK.03/2018 ("Reg 15/2018"), dated 13 February 2018, concerning Alternative Methods to Calculate Gross Turnover. This is an implementing regulation to Article 14, paragraph (5) of Law No. 7 of 1983, as last amended by Law No. 36 of 2008 regarding Income Tax (“Article 14, paragraph (5), Income Tax Law”).
Article 14, paragraph (5), Income Tax Law and its elucidation provide that when a taxpayer's real gross income and net income cannot be accurately calculated due to his failure to meet his legal obligations to keep these records ("pencatatan") or accounting books ("pembukuan"), or his failure to present them to an auditor with sufficient supporting evidence, the auditors will calculate his net income ("penghasilan neto") using the Deemed Profit Norm, and the Gross Turnover ("peredaran bruto") on other bases to be set out under MoF Regulations to be issued in due course. Reg 15/2018 introduces alternative methods to calculate a taxpayer's gross turnover during a tax audit. These methods include:
- Cash and non-cash transactions: The tax auditor will calculate the gross turnover under this method based on the available data and / or information of cash and non-cash transaction within a tax year.
- Sources and uses of funds: The gross turnover is calculated based on available data and/or information in a tax year related to the sources and / or uses of funds.
- Units and / or volume: The gross turnover is calculated based on available data and / or information related to the total units and/or volume of business produced in a tax year.
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The Indonesia Investment Coordinating Board (Badan Koordinasi Penanaman Modal or "BKPM") recently updated its regulations to streamline procedural and licensing requirements for investment companies. Regulation No. 13 of 2017 on Guidelines and Procedures for Investment Facilities and Licensing ("Regulation 13") came into operation on 2 January 2018 for BKPM, and will take effect on 2 July 2018 for regional investment coordinating bodies. The new guidelines are relevant to all current foreign and domestic investors and investment companies, as well as prospective investors interested in pursuing Indonesian interests.
Regulation 13 repealed and replaced various Regulations which were perceived to be cumbersome and disorganised. It also introduced new provisions that clarify existing uncertainty in the market.
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The Ministry of Energy and Mineral Resources ("MEMR") recently issued four revoking regulations in the energy and mineral resources sector. The four revoking regulations are:
- MEMR Regulation No. 6 of 2018 on the revocation of regulations in the oil and gas sector (which revokes 11 regulations)
- MEMR Regulation No. 7 of 2018 on the revocation of regulations in the electricity sector (which revokes 4 regulations);
- MEMR Regulation No. 8 of 2018 on the revocation of regulations in the minerals and coal sector (which revokes 7 regulations); and
- MEMR Regulation No. 9 of 2018 on the revocation of regulations in the new and renewable energy, and energy conservation sectors (which revokes 5 regulations).
The objective of the revocation is to increase the investment opportunity and stimulate economic growth by, among others, simplifying the licensing process of businesses. This is part of the Government’s deregulation program in energy and mineral resources sector to create more competition within the industry.
Please note that whilst the information in this Update is correct to the best of our knowledge and belief at the time of writing, it is only
intended to provide a general guide to the subject matter and should not be treated as a substitute for specific professional advice.
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Assegaf Hamzah & Partners
Jakarta Office
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Contacts: Ahmad Fikri AssegafSenior Partner/Co-FounderD +62 21 2555 7800 F +62 21 2555 7899 ahmad.assegaf@ahp.co.idBono Daru AdjiManaging PartnerD +62 21 2555 7800 F +62 21 2555 7899 bono.adji@ahp.co.idChandra M HamzahPartnerD +62 21 2555 7800 F +62 21 2555 7899 chandra.hamzah@ahp.co.idEri HertiawanPartnerD +62 21 2555 7800 F +62 21 2555 7899 eri.hertiawan@ahp.co.idIbrahim Sjarief AssegafPartnerD +62 21 2555 7800 F +62 21 2555 7899 ibrahim.assegaf@ahp.co.id
Rajah & Tann Singapore LLPContacts: Hamidul HaqPartnerD +65 62320398hamidul.haq@rajahtann.comPaul NgPartnerD +65 62320429paul.ng@rajahtann.com| Rajah & Tann Asia is a network of legal practices based in Asia. |
Member firms are independently constituted and regulated in accordance with relevant local legal requirements. Services provided by a member firm are governed by the terms of engagement between the member firm and the client. |
This update is solely intended to provide general information and does not provide any advice or create any relationship, whether legally binding or otherwise. Rajah & Tann Asia and its member firms do not accept, and fully disclaim, responsibility for any loss or damage which may result from accessing or relying on this update. |
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