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The Exchange of Tax Information Portal is an initiative of the Global Forum on Transparency and Exchange of Information for Tax Purposes. The Global Forum conducts peer reviews of its member jurisdictions' ability to co-operate with other tax administrations in accordance with the internationally agreed standard. The standard provides for exchange of information on request where it is foreseeably relevant to the administration and enforcement of the domestic tax laws of the requesting jurisdiction. Effective exchange of information requires that jurisdictions ensure information is available, that it can be obtained by the tax authorities and that there are mechanisms in place allowing for the exchange of that information. The Global Forum's peer review process examines both the legal and regulatory aspects of exchange (Phase 1 reviews) and the exchange of information in practice (Phase 2). The EOI Portal will track the development of these peer reviews, including changes that jurisdictions make in response to the Global Forum's recommendations.

Peer Review: Indonesia Phase 2 Report

This report for Indonesia has been published on 4 Aug 2014. You can buy this report, or browse it online below.

Skip directly to the Executive Summary. You may also want to view the tables of determinations and ratings.


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Determinations and Recommendations

Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities. (ToR A.1)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Largely Compliant.   Notwithstanding that monitoring and enforcement of the obligation to submit a tax return (which contains ownership and identity information in respect of all relevant entities) covers all incoming tax returns, the overall compliance with this obligation is low. In addition, limited monitoring and enforcement takes place of other obligations to keep or submit ownership and identity information.  Indonesia should ensure that its monitoring and enforcement powers are sufficiently exercised in practice to support the legal requirements which ensure the availability of ownership and identity information in all cases. 
Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements. (ToR A.2)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.      
Banking information should be available for all account-holders. (ToR A.3)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.      
Competent authorities should have the power to obtain and provide information that is the subject of a request under an exchange of information arrangement from any person within their territorial jurisdiction who is in possession or control of such information (irrespective of any legal obligation on such person to maintain the secrecy of the information). (ToR B.1)
Determination Factors Recommendations
The element is not in place.   Indonesia requires the name of the taxpayer to access information held by banks, and the name of the account-holder or the account number to access information on securities accounts held by custodians.  Indonesia should ensure that the identification requirements in its laws to access bank information and information on securities accounts held by custodians are in line with the international standard. 
Phase 2 Rating Factors Recommendations
Non-Compliant.   In some cases, e.g. where an Indonesian taxpayer has already been audited for Indonesian tax purposes, only a limited range of compulsory powers is available to the Indonesian authorities to compel the production of information following an EOI request, which may lead to delays in obtaining the information.  Indonesia should reconsider the compulsory powers available to them to compel the production of information following an EOI request. 
The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the requested jurisdiction should be compatible with effective exchange of information. (ToR B.2)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.      
Exchange of information mechanisms should provide for effective exchange of information. (ToR C.1)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   A number of agreements signed more than two years ago have not yet been ratified by Indonesia.  Indonesia should take all necessary steps to bring exchange of information agreements into force expeditiously. 
The shortcomings identified in Part B of this report mean that Indonesia may not able to fully comply with the terms of its EOI arrangements with respect to its ability to access bank information or information regarding securities accounts in certain cases, although there is no similar impediment to access to information in other cases (see B.1).  Indonesia should amend its legislation in such a way that it can fully comply with the terms of its information exchange agreements. 
Phase 2 Rating Factors Recommendations
Largely Compliant.      
   
The jurisdictions' network of information exchange mechanisms should cover all relevant partners. (ToR C.2)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.      
The jurisdictions' mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received. (ToR C.3)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.      
The exchange of information mechanisms should respect the rights and safeguards of taxpayers and third parties. (ToR C.4)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.      
The jurisdiction should provide information under its network of agreements in a timely manner. (ToR C.5)
Determination Factors Recommendations
The assessment team is not in a position to evaluate whether this element is in place, as it involves issues of practice that are dealt with in the Phase 2 review.      
Phase 2 Rating Factors Recommendations
Largely Compliant.   During the three-year review period, Indonesia did not provide status updates to its EOI partners within 90 days where relevant.  Indonesia should provide status updates to its EOI partners within 90 days where relevant. 
Although since 2013 the Indonesian authorities have organised several programs to sensitise officers, there has been a lack of awareness to the importance of EOI at the level of local tax offices, which are responsible for collecting a significant part of the information for EOI purposes. This has caused delays in responding to EOI requests.  Indonesia should monitor the coordination procedures between the competent authority and local tax offices, and establish priority guidelines to sensitise local tax office staff regarding information exchange in order to respond to requests in a timely manner. 
Although new staff was recently allocated to the Section responsible for EOI, the Indonesian competent authority was not adequately staffed to handle all incoming EOI requests in a timely manner during the three-year review period.  Indonesia should monitor that the resources allocated to its competent authority are sufficient to deal with all incoming EOI requests in a timely manner.