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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 Second Round Review (2018)

This report for Indonesia has been published on 16 Jul 2018. You can 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, but certain aspects of the legal implementation of the element need improvement.   The existing AML obligations apply to the extent an entity or arrangement has a relationship with an obligated person. For the rest, the definition of “beneficial owner” as contained in Indonesia’s new Presidential Regulation on Beneficial Ownership Identification Principles contains some ambiguities. It is not clear whether all beneficial owners need to be identified. Further, the definition imposes a 25% threshold on some types of entities, such as partnerships and foundations. Finally, in the absence of additional interpretive guidance, it is not clear whether the notions of direct and indirect ownership and control through other means will be adequately reflected.   Indonesia is recommended to ensure that beneficial ownership information is available in line with the international standard. 
Phase 2 Rating Factors Recommendations
Partially Compliant.  Notwithstanding that monitoring and enforcement of the obligation to submit a tax return (which contains legal ownership and identity information) covers all incoming tax returns, the overall compliance with this obligation remains low despite some improvement in tax compliance rate over the last 3 years. In addition, limited monitoring and enforcement takes place of other obligations to keep or submit legal ownership and identity information.  Indonesia should continue to make progress towards ensuring that its monitoring and enforcement powers are sufficiently exercised in practice to support the legal requirements which ensure the availability of legal ownership and identity information in all cases. 
Some professionals were subject to AML obligations in 2017 and new legal obligations ensuring the availability of beneficial ownership information of companies were introduced in 2018. However, the new legal obligations need to be supplemented by more detailed guidelines and the implementation efforts by relevant authorities appear to be fragmented. The agencies’ plans to effectively supervise the new requirements have also not been finalised.  Indonesia is recommended to monitor the implementation of new provisions to ensure beneficial ownership information is available. 
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
Largely Compliant.  Notwithstanding some improvement in tax compliance rate over the last 3 years and the implementation of a compliance programme by the DGT, the compliance rate remains globally low and does not allow to ensure that accounting information is always available as required under the standard.  Indonesia should continue to make progress towards ensuring that its monitoring and enforcement powers are sufficiently exercised in practice to support the legal requirements which ensure the availability of accounting information in all cases.  
Banking information should be available for all account-holders. (ToR A.3)
Determination Factors Recommendations
The element is in place.   Beneficial owner(s) of account-holders may be unidentified in respect of customers representing low risk for AML/CFT purposes.  Indonesia should ensure that beneficial owners of all account-holders are required to be identified. 
Phase 2 Rating Factors Recommendations
Largely Compliant.  Indonesia recently amended the obligations of banks to identify and verify the identity of the accounts holders and their beneficial owners.   Indonesia is recommended to monitor that all beneficial owners are identified in practice.  
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 in place.      
Phase 2 Rating Factors Recommendations
Largely Compliant.  New legislation amending the procedure for accessing bank information entered into effect in 2017. The new procedure has been successfully applied to obtain bank information in several instances.  Indonesia should monitor the implementation of new provisions relating to access to bank information. 
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.      
Phase 2 Rating Factors Recommendations
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.   This element involves issues of practice. Accordingly no determination on the legal and regulatory framework has been made.   
Phase 2 Rating Factors Recommendations
Largely Compliant.  Although since 2013 the Indonesian authorities have organised several programmes to sensitise officers and set new rules, there remains 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. Further, the procedures in place for local tax offices to collect information result in extremely protracted timelines. This has caused delays in responding to EOI requests in the first round of reviews and continues to be the primary source of delay.  Indonesia should monitor the implementation by the local offices of the procedures recently in place between the competent authority and local tax offices so as to respond to requests in a timely manner.