Asia Pacific tax authorities are actively seeking to reduce tax leakages, non-compliance, and what they perceive to be tax avoidance activities. To help you position your business for success in an era of ever-changing tax rules and intense scrutiny, our subject matter experts from across the region and globally will come together to examine key developments. We will discuss the impact of emerging trends and current issues on your business models and strategies, sharing practical tips on how you can maximize opportunities to achieve the best risk mitigation outcomes.

Indonesia has been in the headlines with its 2022 G-20 presidency from December 2021 through November 2022. During its presidency, Indonesia was supportive of international community tax initiatives such as carbon tax policies and the global minimum tax. Domestically, the Indonesian government introduced tax reforms to update its tax systems and align its tax policies with international standards. In an article published in Tax Notes International, Baker McKenzie’s Ria Muhariastuti and Harizka Rizal discuss the Indonesian government’s efforts to reform its tax policies to meet international standards.

On 20 December 2022, the Indonesian government issued Government Regulation No. 55 of 2022 on the Adjustment of Regulations in the Field of Income Tax (“GR 55/2022”). This regulation is one of a series of government regulations issued in December 2022 as the implementing regulations of Law No. 7 of 2021 on Tax Regulation Harmonization (“HPP Law”). Several regulations related to income tax (i.e., GR 18/2009, GR 23/2018, and GR 30/2020) are no longer valid, and have been consolidated through the issuance of GR 55/2022. GR 55/2022 mainly provides confirmation and a detailed explanation of income tax provisions under the HPP Law. These include income tax on benefits-in-kind, anti-tax avoidance measures, and international tax agreements.

The Carbon Tax was introduced in Law No. 7/2021 on Harmonization of Tax Regulation. The Carbon Tax will be imposed on carbon emissions that have a negative impact on the environment. The law stated that the Carbon Tax would be applied starting on 1 April 2022 for coal fired power plants. The law requires an implementing regulation in the form of a Minister of Finance regulation to stipulate the tariff and basis of the Carbon Tax, and a government regulation to stipulate the tax subject and tax object. There has to be consultation on the regulations with the Indonesian parliament.

The government has expanded the tax incentives given to taxpayers that are affected by COVID-19. Some taxpayers that were not entitled to tax incentives under Minister of Finance Regulation No. 23/PMK.03/2020 (“MOF Regulation 23”) may now enjoy those tax incentives under Minister of Finance Regulation No. 44/PMK.03/2020 (“MOF Regulation 44”). The government has also expanded the types of tax for which tax incentives are given. 

MOF Regulation 44, which revokes MOF Regulation 23, came into force on 27 April. 

The Directorate General of Taxation has also issued Circular Letter No. SE29/PJ/2020 on 30 April 2020 as an implementing regulation of MOF Regulation 44.

In brief Recent developments The Indonesian government recently issued Government Regulation in Lieu of Law, Peraturan Pemerintah Pengganti Undang-Undang, No. 1 of 2020 (“Perppu 1/2020”) to mitigate the economic impact of the outbreak of Coronavirus Disease 2019 (COVID-19). This will allow more state spending and financial relief efforts to help the…