Legal Updates for March 2018

Supreme Court and Ministry of Foreign Affairs sign MoU Giving Additional Guidance on Judicial Assistance in Overseas Civil Matters

On 20 February 2018, the Supreme Court of Indonesia along with the Ministry of Foreign Affairs signed Memorandum of Understanding No. PRJ/HI/102/02/2018/01, No. 01/NK/MA/2/2018 (the "MoU") which renews the prior existing MoU concerning Judicial Assistance in Civil Matters dated 19 February 2013. The renewal of such MoU is important due to the increasing number of requests from Indonesian courts to send court documents in civil matters (i.e, court summons, notice of decision) to foreign courts and vice versa.

AHP Supports Pivotal Transactions for Sustainability

On 1 March 2018, Indonesia became the first country ever to issue a green sukuk bond. Assegaf Hamzah & Partners (“AHP”) advised the Government of Indonesia on the transaction, drawing on the firm's extensive expertise in this field. Partner Ahmad Fikri Assegaf advised the Ministry of Finance in 2008 on the drafting of Indonesia's first Islamic bond legislation, and AHP's expert team has built a stellar reputation for its role in advising the Government on sukuk issuance.

This landmark sukuk came directly after AHP advised the borrowers, PT Royal Lestari Utama, in relation to a pioneering corporate sustainability bond. Valued at US$95 million, the corporate green bond issuance (23 February 2018) was the first of its kind in Asia.

More Companies are Fined by KPPU For Late Notification of Transactions

Although the Merger Control Regulations have been in place for eight years, it appears that some big companies are still unaware of their obligations to notify certain transactions to the Komisi Pengawas Persaingan Usaha ("KPPU"), the Indonesian competition commission. In February 2018, KPPU imposed fines on the following companies for their late notifications on their transactions:

  1. PT Plaza Indonesia Realty, Tbk. was fined IDR 1 billion (approximately USD 72 thousand) for its late notification on the acquisition of PT Citra Asri Property; and
  2. PT Nirvana Property was fined IDR 1 billion (approximately USD 72 thousand) for its late notification on the acquisition of PT Mutiara Mitra Bersama.

These fines bring the number of late notification fines since 2012 to 9. AHP believes the number of companies that are fined will continue to increase since KPPU is in the process of investigating other late notification cases.

Alternative Methods to Calculate Gross Turnover in the Tax Audit

The Minister of Finance ("MoF") has recently issued new guidelines for the calculation of gross turnover during a tax audit, under MoF Regulation No. 15/PMK.03/2018 ("Reg 15/2018") concerning Alternative Methods to Calculate Gross Turnover. This is an implementing regulation to Article 14 paragraph (5) of Law No. 7 of 1983, as last amended by Law No. 36 of 2008 regarding Income Tax.

Article 14 paragraph (5) of the Income Tax Law provides that when a taxpayer's real gross income and net income cannot be accurately calculated due to the taxpayer's failure to meet the legal obligations to keep these records ("pencatatan") or accounting books ("pembukuan"), or failure to present them to an auditor with supporting evidence, the auditors will calculate the net income ("penghasilan neto") using the Deemed Profit Norm, and the Gross Turnover ("peredaran bruto") on other bases to be set out under forthcoming Ministry of Finance Regulations. Reg 15/2018 introduces various other methods to calculate the taxpayer's gross turnover during a tax audit.