As readers may be aware, the Indonesian legislation has equipped the tax authority with several specific measures to combat tax avoidance practices, such as controlled-foreign corporation (CFC), transfer pricing, thin capitalisation, and indirect transfer of shares regulations. Nonetheless, these measures are insufficient in some circumstances to combat the ever-evolving creative tax avoidance schemes.
Now, the President has further empowered the tax authority by issuing new measures to combat tax avoidance practices under Government Regulation No. 55 of 2022 on Rules Adjustments in Income Tax (“Regulation”), which became effective on 20 December 2022. These measures include formalising the “substance-over-form” principle into a written provision.
For more information, click here to read the full Legal Update.
