TaxUpdate August 2017 Indonesian Controlled Foreign Company (“CFC”) Rules The Minister of Finance (“MoF”) has issued Regulation No. 107/PMK.03/2017 dated 26 July 2017 (“PMK107”) on CFC rules, which is applicable from fiscal year 2017. PMK107 revokes MoF Regulation No. 256/PMK.03/2008 (“PMK256”). PMK107 is far more comprehensive than its predecessor and it includes an appendix that provides illustration of CFC determination, calculation of deemed dividends, and calculation of foreign tax credit. Selected key features of PMK107 are as follows: No Key Features Descriptions Comments 1 CFC coverage Only applicable to non-publicly listed CFC. CFC covers: 1. Direct CFC (“D-CFC”): at least 50% owned by an Indonesian taxpayer or collectively by Indonesian taxpayers; and 2. Indirect CFC (“I-CFC”): at least 50% owned by other CFC(s) or collectively owned by other CFC(s) and the Indonesian shareholder(s). No change from PMK256. PMK256 only covers D-CFC. Determination of I-CFC ignores the effective percentage of ownership by the Indonesian shareholder, as it focuses on 50% or more ownership in each layer of shareholding. For example: an Indonesian shareholder owns 50% of shares in A Ltd, and A Ltd owns 50% shares in B Ltd. In this case, A Ltd is a D-CFC and B Ltd is an I-CFC despite effective ownership of 25% (i.e. 50% x 50%) by the Indonesian shareholder.
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TaxUpdate 01 2017 - CFC - AHSCahsc.co.id/news/pdf/TaxUpdate 01_2017 - CFC.pdf · TaxUpdate August 2017 Indonesian Controlled Foreign Company (“CFC”) Rules The Minister of Finance
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TaxUpdate
August2017
Indonesian Controlled Foreign Company (“CFC”) Rules TheMinisterofFinance(“MoF”)hasissuedRegulationNo.107/PMK.03/2017dated26July2017(“PMK107”)onCFCrules,whichisapplicablefromfiscalyear2017.PMK107revokesMoFRegulationNo.256/PMK.03/2008(“PMK256”).PMK107isfarmorecomprehensivethanitspredecessoranditincludesanappendixthatprovidesillustrationofCFCdetermination,calculationofdeemeddividends,andcalculationofforeigntaxcredit.SelectedkeyfeaturesofPMK107areasfollows:
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