Indonesia managed to maintain a steady economic growth in the face of ongoing global recession. To safeguard this growth, the Government is committed to keep an attractive regulatory environment for domestic and foreign investments. As a matter of fact, some two thirds of the Indonesian state income is derived from taxes.
Indonesia’s complex taxation laws stem from policy being stipulated not only through the Minister of Finance and the Director General of Taxes, but also through Presidential decrees, as well as Provincial policy and local government’s regulations. In addition, changes in tax collection policies could be retroactive, affecting earnings from the past, leading ambiguous situations in some cases.
Currently the Indonesian tax climate is solely based on self-assessment, yet the tax administration closely supervises. With frequent tax audits, taxpayers are challenged to justify transactions. If the tax administration deems any breach of tax laws, it may seek high amount of assessment and impose severe penalties. However, worries about taxation need not withhold you from doing business in Indonesia, as it is a still a steadily growing promising market.
In recent years, tax assessments more often lead to tax disputes. These can lead to a lengthy process of objection, appeal to the Tax Court and a reconsideration process to the Supreme Court. The costly, time consuming procedure is best prevented by ensuring tax compliance and, in case of tax disputes, effectively managing the above dispute resolution process.
Rustan Consulting’s team of experienced professionals advise and assist multinational and local companies to effectively set up their corporate presence in a way that is locally prudent and aligns with all global business objectives and operations. Beyond maximizing opportunities for tax savings and tax efficiency, this also extends to financial and related services through a regional network of associates and affiliates.
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