Indonesian Constitutional Court Orders Government and House of Representatives to Rectify Job Creation Law Within Two Years
On November 25, 2021, the Constitutional Court (the “Court”) issued the decision No. 91/PUU-XVVII/2020 (the “Decision No. 91”) in relation to a petition for a formal review (the “Petition”) of Law No. 11 of 2020 on Job Creation (the “Job Creation Law”). The Petition was submitted by 6 (six) petitioners on October 15, 2020.
- The Petition
In essence, the Petition sought the Court to conduct a formal review of the Job Creation Law (as opposed to a review of substance), and to determine the Job Creation Law to be unconstitutionally promulgated and shall thus be null and void based on the following conditions:
- The omnibus law method of the Job Creation Law is a vague method. It is unclear whether the Job Creation Law is a new law, an amendment of a law, or a revocation of law, as regulated under Law No. 12 of 2011 on Enactment of Laws and Regulations as amended by Law No. 15 of 2019 (the “Law No. 12/2011”);
- The omnibus law method is not recognized under Law No. 12/2011;
- There are certain differences in the contents of the Job Creation Bill (the “Bill”) agreed by the President and the House of Representatives with the contents of the Job Creation Law (that is promulgated by the President); and
- The promulgation of the Job Creation Law did not fulfill the principles that need to be fulfilled in the preparation and promulgation of new laws.
- Legal Considerations in Decision No. 91
In the Decision No. 91, the Court sets out the following key considerations:
Construction of a new, an amendment, or a revocation law must adhere to Law No. 12/2011
The Court considered that the Job Creation Law, which amends 77 (seventy seven) existing laws and revokes 1 (one) law, is not in compliance with Law No. 12/2011. The Court held that the format of a law, as set out in the Law No. 12/2011, must be adhered to when constructing and promulgating a new law, an amendment of a law, or a revocation of a law. The Court’s judges had determined that the Job Creation Law is unconstitutional because it does not comply with Law No. 12/2011. But please see further considerations below.
The usage of omnibus law method in Job Creation Law is not necessarily unconstitutional
The Court held that an omnibus law is a law that relates to or deals with numerous objects or items at once, including many matters or having various purposes. The Court considered that the omnibus law method used for the Job Creation Law is not necessarily unconstitutional in and of itself. However, in constructing a new law (including an omnibus law), the method that will be used shall be limited to the methods that are already recognized and regulated by the Constitution and its extension (i.e., Law No. 12/2011).
Since Law No. 12/2011 does not recognize the omnibus law, then the Job Creation Law does not meet the requirements under Law No. 12/2011.
Substantial differences between the Bill and the promulgated Job Creation Law
In the process of enacting a new law, the President and the House of Representatives may agree on a bill which contains the provisions that would later be enacted as a law. Such agreed bill shall be considered as the final form of the law which would then be promulgated into a law. However, the Court noted that there are at least 9 (nine) different provisions between the Bill and the promulgated Job Creation Law. These differences render the Job Creation Law unconstitutional due to non-compliance with Law No. 12/2011.
Job Creation Law does not fulfill the principle of public participation
The Court held that there were several public discussions held in the preparation of the Job Creation Law. However, the Court noted that such public discussion did not discuss the contents of the academic draft and the actual amendments in the Bill. Additionally, the Court noted that the academic draft and the Bill were not easily accessible to the public. Therefore, the Court held that the preparation of the Job Creation Law did not fulfill the principle of public participation.
Court recognizes importance of Job Creation Law
The Court held that it understood and acknowledged the paramount importance of the substance of the Job Creation Law. However, such paramount importance should not give a ‘free pass’ for the Government and the House of Representatives to ignore the Constitution and Law No. 12/2011 in approving and promulgating the Job Creation Law.
Accordingly, rather than outright declaring the Job Creation Law to be unconstitutional, the Court decided to declare the Job Creation Law to be conditionally unconstitutional. In addition, the Court allowed the Government and the House of Representatives to rectify the Job Creation Law in compliance with the Constitution.
Dissenting opinions of Judges
We note that 4 (four) Judges had dissenting opinions in the Decision No. 91. The four Judges were outnumbered as there are 9 (nine) judges in the Constitutional Court. The four dissenting Judges generally held that the Job Creation Law is formally constitutional.
Two of the four dissenting Judges (Mr. Arief Hidayat and Mr. Anwar Usman) held that the fact that Law No. 12/2011 did not regulate the usage of the omnibus law form shall not cause the Job Creation Law to be unconstitutional since the omnibus law form is not in contradiction with the Pancasila and the Constitution. Furthermore, these dissenting Judges held that the format of a law as set out in Law No. 12/2011 is a mere guideline and is therefore unnecessary to be strictly and rigidly construed. In conclusion, these dissenting judges had deemed that the Job Creation Law is not formally unconstitutional since the omnibus law form is permissible under the Constitution and Law No. 12/2011. However, we note that these dissenting Judges also held that a material review of the Job Creation Law is necessary, specifically regarding its amendments to the law on manpower.
The other two dissenting Judges (Mr. Manahan M.P. Sitompul and Mr. Daniel Yusmic P. Foekh) also held that the Job Creation Law is constitutional. Generally, the basis of their dissenting opinion is the same with the basis of the other two dissenting Judges. However, we note that these dissenting Judges also held that all the principles of law making have been fulfilled by the Job Creation Law and that Law 12/2011 must be amended to include omnibus law format within 2 (two) years as of the Decision No. 91.
- Decision No. 91 Declarations and Orders
Based on the above considerations, the Court issued the following declarations and orders in the Decision No. 91:
- Declares the construction of the Job Creation Law contradicts the Constitution and is conditionally not legally binding if not “rectified” within 2 (two) years;
- Declares the Job Creation Law to still be valid until the above rectification is made within 2 (two) year period;
- Orders the lawmakers to rectify the Job Creation Law within 2 (two) years and that the Job Creation Law shall become permanently unconstitutional if the rectification is not made within 2 (two) years;
- Declares that if the necessary rectification were not concluded within the 2 (two) years period, then the laws, articles, or provisions of the laws that were revoked or amended by the Job Creation Law shall be reinstated and be valid; and
- Orders the Government to refrain from taking any strategic action/policy which has broad impact, and restricts the issuance of new implementing regulations related to the Job Creation Law.
- Legal Consequences of Decision No. 91
We set out below our preliminary views on legal consequences that may arise out of the Decision No. 91.
Uncertainty of Rectification to Job Creation Law
Based on the Decision No. 91, the Job Creation Law is essentially conditionally unconstitutional due to the following reasons:
- The format of the Job Creation Law is not yet regulated in Law 12/2011;
- There are different provisions between the Bill and the promulgated Job Creation Law; and
- The preparation of Job Creation Law did not fulfill the principle of public participation.
As set out above, there are several rectifications that must be made to the Job Creation Law within 2 (two) years. However, unfortunately, the Constitutional Court did not specify as to what rectification that are required to be made to the Job Creation Law.
Based on the Decision No. 91, the current format of the Job Creation Law is not made accordance with the format set out in Law No. 12/2011. Even the current format of the Job Creation Law (i.e. the omnibus law format) is not recognized under Law No. 12/2011. In the consideration of the Decision No. 91, the Court states that lawmakers shall form a legal basis for the omnibus law format. However, we believe that there might be several issues which may arise from the said approach, including whether such new legal basis may be retroactively applicable to the Job Creation Law.
We also note that the Job Creation Law is declared to be conditionally unconstitutional by the Court due to the difference in provisions between the Bill and the promulgated Job Creation Law. This issue may be addressed by returning the provisions of the enacted Job Creation Law to the one that were agreed by the House of Representatives and the President. However, returning such provision to the Bill may cause other new issues, since the Bill contained numerous wrong references and missing provisions. In addition, any amendment to the Job Creation Law will require the approval of both the House of Representatives and the President.
Furthermore, the Decision No. 91 is unclear on the actions that the lawmakers need to take for the Job Creation Law to be able to fulfill the principle of public participation. Even if the lawmakers were to hold several public participation sessions, it will still raise a question whether such sessions would be satisfactory to solve the said issue.
Given the above, we find that the Decision No. 91 creates uncertainty for the rectification and the status of the Job Creation Law. We find that there is a high possibility that the Job Creation Law might not be able to be rectified in time or the rectification would be deemed unsatisfactory.
Government limitation in conducting strategic and broad impact actions/policies
The Decision No. 91 orders the Government to refrain from taking any strategic action/policy which has broad impact in relation to the Job Creation Law. We note that this order was not even requested in the Petition.
We also view that the Court may not have the authority to issue such limitation. According to Article 24C paragraph (1) of the Constitution, the authority of the Court is to review a law against the Constitution, to decide the authority dispute between government institutions whose authority is granted by the Constitution, to decide the disbandment of political parties, and to decide on election disputes.
Accordingly, we believe that the Decision No. 91 would give rise to numerous questions as to whether such order would be effectively applicable and whether there would be any possibility to enforce this order, if at all.
No new implementing regulation to Job Creation Law
Although the Decision No. 91 declared that the Job Creation Law, and consequently its existing implementing regulations, to remain valid within the above 2 (two) year period pending the required rectification, the Decision No. 91 ordered the Government not to issue new implementing regulations of the Job Creation Law.
The prohibition for the government in issuing new implementing regulations of the Job Creation Law may cause massive legal uncertainty that arises from the inconsistency of the amended and revoked provisions of the laws by the Job Creation Law and the older and currently applicable implementing regulations.
Decision No. 91 might impact other laws created in an omnibus law format
Given that the Court finds that the current omnibus law format in the Job Creation Law is not in accordance with Law no. 12/2011, the Decision No. 91 might impact other laws which were created in an omnibus law format. Considering that the President had promulgated Law No. 7 of 2021 on the Harmonization of Tax Regulations, which also uses the omnibus law format, there is a possibility that the said law might be petitioned for a formal review to the Court by using the Decision No. 91 as its legal basis.
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November 30, 2021
Please contact Raden Suharsanto Raharjo (rraharjo@aksetlaw.com) or Alfan Zakiyanto (azakiyanto@aksetlaw.com) for further information.
Disclaimer:
The foregoing material is the property of AKSET and may not be used by any other party without prior written consent. The information herein is of general nature and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. Specific legal advice should be sought by interested parties to address their particular circumstances.
Any links contained in this document are for informational purposes and are available and relevant at time this publication is made. We provide no liability whatsoever in respect of any information or content in such links.
New Covid-19 Variant: Indonesia Imposes Travel Bans for Travelers from Certain Countries
In light of the newly discovered Covid-19 B.1.1.529 strain (dubbed as the Omicron variant), several countries all over the world are closing their borders to travelers from a number of African countries in an effort to prevent an outbreak of the new variant. According to the World Health Organization, the Omicron variant was first identified in South Africa on November 24, 2021. Currently cases of the new strain have been discovered in the UK, Germany, Belgium, and Italy.
As a response to the Omicron variant, several countries have announced new measures against travelers from certain African countries. The UK, US, Australia, and Canada have decided to impose travel bans against foreigners travelling through African countries affected by the new variant. Meanwhile, Japan and India will enact more rigorous screening and quarantine policies from travelers arriving from Africa.
Indonesia has decided to mirror the travel bans imposed by the US and UK. On November 27, 2021, the Director General of Immigration issued Circular Letter No. IMI-0269.GR.01.01 of 2021 on Temporary Restrictions for Foreigners that Have Lived or Visited Certain Countries to Enter Indonesia in an Effort to Prevent the Spread of the New B.1.1.529 Covid-19 Variant (“Letter 0269”)
Under Letter 0269, foreigners that have lived in or visited South Africa, Botswana, Namibia, Zimbabwe, Lesotho, Mozambique, Eswatini and Nigeria (collectively, the “African Countries”) within 14 days prior to their planned travel into Indonesia will be denied entry. Furthermore, the Immigration Office will suspend the issuance of travel/limited stay visas for nationals of the African Countries. However, these provisions do not apply to foreigners who will attend the G20 meeting regarding the Indonesian Presidency.
Letter 0269 is effective as of November 29, 2021 and will continue to be evaluated as the situation develops.
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November 29, 2021
Please contact Johannes C. Sahetapy Engel (jsahetapyengel@aksetlaw.com) or Caleb K. N. Sitorus (csitorus@aksetlaw.com) for further information.
Disclaimer:
The foregoing material is the property of AKSET and may not be used by any other party without prior written consent. The information herein is of general nature and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. Specific legal advice should be sought by interested parties to address their particular circumstances.
Any links contained in this document are for informational purposes and are available and relevant at time this publication is made. We provide no liability whatsoever in respect of any information or content in such links.
Transparency in Fundraising: Government Regulates Money/Item Collection Activities for Social Purposes
In order to implement a more organized and transparent system for Money and Items Collection (the “Collection”) within the context of social aid/welfare, the Minister of Social Affairs (the “MOSA”) issued Regulation No. 8 of 2021 dated September 24, 2021 on the Implementation of Collection of Money or Items (“Reg. 8/2021”). Despite being a new regulation, MOSA Reg. 8/2021 is not the state’s first attempt in governing the Collection mechanisms for social welfare. In 1980, the government issued Government Regulation 29 of 2018 on Donation Collection dated August 28, 1980 (“GR 29/1980”) which governs similar matters. However, GR 29/1980 does not explicitly define what is meant by “donations”. It is also important to that GR 29/1980 remains effective, meaning that MOSA Reg. 8/2021 and GR 29/1980 are complementary to each other.
MOSA Reg. 8/2021 revoked MOSA Decree No. 1/HUK/1995 dated January 6, 1995 on Collection of Donations for Disaster Victims and MOSA Decree No. 56/HUK/1996 dated September 19, 1996 on Collection of Donations by the Public. Further, MOSA Reg. 8/2021 itself contains provisions which details the requirements and procedures to carry out the Collection activities, which we summarize below.
- Scope and Types
Collection under MOSA Reg. 8/2021 only refers to Collection that is aimed for social welfare, mental/religious/spiritual, wellbeing and cultural development, and shall be conducted through a Mass Organization that has a legal entity status. The Mass Organizations that may conduct the Collection are only in the form of (i) an association (perkumpulan), or (ii) a foundation (yayasan).
The type of Collection is divided into two: (i) Collection that requires a permit (the “Unexempted Collection”) and (ii) Collection that does not require a permit (the “Exempted Collection”). In general, all Collection activities require permits, unless expressly exempted under Reg. 8/2021, namely those that are:
- for zakat;
- done in places of worship;
- done in emergency situations within a closed community;
- for mutual cooperation (gotong royong) done within schools, offices, neighborhood communities, wards, villages, or other communities; and
- done spontaneously within limited meetings.
- Requirements and Procedures
As mentioned above, the Unexempted Collections require a permit from either the Minister, the relevant Governor or the relevant Regent/Mayor. Mass Organizations that intend to conduct the Collection activities may apply for the permit by submitting an application to the relevant institution, complete with all the necessary administrative documents. Among the required documents, the notable ones include a proposal for the activity and also examples for the advertisements/other promotional materials that will be used. Essentially, Mass Organizations must disclose the details, specifications, and purpose of the programs they wish to hold to the relevant institutions for further approval. If approved, the Collection permit is valid for 3 months and may be extended one time for no longer than 1 month.
While these licensing requirements are only applicable to the Unexempted Collections, both types of the Collection activities may be carried out through a number of methods/programs mentioned in Reg. 8/2021, such as holding shows, bazaars, auctions and a number of other programs that are in accordance with existing laws and regulations. It may be worth noting that these programs under Reg. 8/2021 are similar to the approved programs for Donations under GR 29/1980, although Reg. 8/2021 does include several more modern programs/methods such as social media programs, digital applications, electronic money services, etc.
Funds/items obtained through the Collection activities must then be channeled or distributed for development purposes, with the relevant Mass Organization having to bear the costs of the distribution. Furthermore, Mass Organizations that hold the unexempted Collecting Activities must submit an accountability report to the institution that issues their license. For the Collection activities that exceed Rp500 million, the report must be audited by a public accountant.
- Sanctions
Unlike GR 29/1980, Reg. 8/2021 does prescribe several administrative and criminal sanctions for violations of Reg. 8/2021. For the Unexempted Collections these sanctions include written warning, permit suspension, and/or permit revocation. On the other hand, administrative sanctions for the Exempted Collections are limited to written warning and/or publication of the violation in mass media. For the criminal sanctions, Reg. 8/2021 refers to the prevailing criminal law provisions.
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November 26, 2021
Please contact Johannes C. Sahetapy-Engel (jsahetapyengel@aksetlaw.com), Thomas P. Wijaya (twijaya@aksetlaw.com), or Caleb K. N. Sitorus (csitorus@aksetlaw.com) for further information.
Disclaimer:
The foregoing material is the property of AKSET and may not be used by any other party without prior written consent. The information herein is of general nature and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. Specific legal advice should be sought by interested parties to address their particular circumstances.
Any links contained in this document are for informational purposes and are available and relevant at time this publication is made. We provide no liability whatsoever in respect of any information or content in such links.
Governors to Stipulate Respective Minimum Wages Following Minister of Manpower Circular Letter
The Minister of Manpower issued Circular Letter No. B-M/383/H1.01.00/XI/2021 dated November 9, 2021 on Submission of Economic and Employment Data in Determining the Minimum Wages in 2022 as a mandate under Government Regulation No. 36 of 2021 dated February 2, 2021 on Wages (“GR 36/2021”). The circular letter summarizes data provided by the Head of Central Bureau of Statistics (Badan Pusat Statistik, or “BPS”) on economic and labor conditions used in determining the 2022 minimum wages.
Provincial, and regency/city minimum wages are set based on economic and employment conditions which shall be adjusted every year. Governors are required to dete-rmine the Provincial Minimum Wages (UMP) no later than November 21, and may determine the Regency/City Minimum Wages (UMK) with certain conditions no later than November 30 every year. The UMK is determined after the UMP is determined, and the UMK should be greater than the UMP. The UMP and UMK determined by governors on November 21 and 30, 2021 shall become applicable on January 1, 2022.
The UMP is stipulated based on the median of the upper limit and lower limit of the minimum wage of the respective areas, with the formula stated under GR 36/2021 (the “Adjustment Formula”). Regencies or cities which have preexisting UMK (i.e., the 2021 UMK) shall make a minimum wage adjustment with the Adjustment Formula. For regencies or cities which do not have a determined UMK yet, shall have separate calculation stages set further under GR 36/2021.
Employers are required to develop and implement the structure and scale of wages, so that the wages for employees with 1 (one) year or more working periods are stipulated based on such structure and scale of wages.
Micro and small business are exempted from the provisions on minimum wages as it is determined based on agreement between the employers and the employees provided that; it is at least 50% of the average consumption of the citizens in the provincial level, and the agreed wage is at least 25% above the poverty line at the provincial level.
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November 16, 2021
Please contact Johannes C. Sahetapy-Engel (jsahetapyengel@aksetlaw.com) or Datanya Nuga Kalula (dkalula@aksetlaw.com ) for further information.
Disclaimer:
The foregoing material is the property of AKSET and may not be used by any other party without prior written consent. The information herein is of general nature and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. Specific legal advice should be sought by interested parties to address their particular circumstances.
Any links contained in this document are for informational purposes and are available and relevant at time this publication is made. We provide no liability whatsoever in respect of any information or content in such links.
The Harmonized Tax Law Amends Provisions on Excise
The newly enacted Law No. 7 of 2021 dated October 29, 2021, on the Harmonization of Tax Regulations (the “Harmonized Tax Law”) amends several existing regulations on the Taxation Law and introduces several new regulations. As the Harmonized Tax Law adopts the Omnibus types (Law No. 11 of 2020 dated November 2, 2020, on Job Creation), its coverage includes the following: General Provisions of Taxes (Ketentuan Umum Perpajakan), Income Taxes (Pajak Penghasilan), Value Added Taxes (Pajak Pertambahan Nilai), Voluntary Disclosure Program (Program Pengungkapan Sukarela), Carbon Taxes, and Excise. This Newsflash explains the amendments relating to the Excise.
The Harmonized Tax Law amends several provisions of Law No. 11 of 1995 dated December 30, 1995, on Excise as lastly amended by Law No. 39 of 2007 dated August 15, 2007 (the “Excise Law”).
Below, we set out the summary of the salient provisions of the Harmonized Tax Law relating to the Excise Law:
- Excise Goods
The Harmonized Tax Law adds Electronic Cigarettes as goods subject to excise. Electronic Cigarettes are included in the tobacco products group. The previous provisions only considered (i) cigarettes, (ii) cigars, (iii) sliced tobacco, and (iv) and other products of tobacco as the tobacco products subject to excise. The elucidation of Article 4 further explains that Electronic Cigarettes are products of tobacco in the form of liquid, solid, or other forms, resulted from the processing of tobacco leaves, served to end consumers, and consumed by electric heating.
- The Expansion of Authority of Customs and Excise Officials
Under the Harmonized Tax Law customs and excise officials are authorized to conduct researches in respect of any alleged violation in the excise sector. If the result of a research proves an alleged violation in the excise sector is an administrative violation, then such violation will be subject to administrative sanctions.
- Cessation of Investigations on Excise Criminal Acts
The cessation of investigation on excise criminal acts was previously regulated without any timeframe after a request from the Minister or the Attorney General. In the Harmonization of Tax Law, the cessation must be conducted within 6 (six) months after the date of a request letter made by the Minister or the Attorney General. The Harmonized Tax Law also stipulates that the cessation may only be conducted in respect of any criminal violation under Articles 50, 52, 54, 56, and 58 of the Excise Law after the concerned party pays the administrative sanctions with the amount of 4 (four) times of the supposedly paid excise value. If a criminal case has been transferred to a court, the defendant may pay the administrative sanctions and it will be a consideration to be prosecuted without imprisonment.
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November 16, 2021
Please contact Johannes C. Sahetapy-Engel (jsahetapyengel@aksetlaw.com), or Ammarsyarif Ghazyandra Goenawan (agoenawan@aksetlaw.com) for further information.
Disclaimer:
The foregoing material is the property of AKSET and may not be used by any other party without prior written consent. The information herein is of general nature and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. Specific legal advice should be sought by interested parties to address their particular circumstances.
Any links contained in this document are for informational purposes and are available and relevant at time this publication is made. We provide no liability whatsoever in respect of any information or content in such links.
The Harmonized Tax Law Amends Provisions on Excise
Law on Harmonization of Taxation Regulations – General Taxation Provisions
The President enacted Law No. 7 of 2021 dated October 29, 2021 on Harmonization of Taxation Regulations (“Law 7/2021”). Law 7/2021 is also an omnibus law like Law No. 11 of 2020 dated November 2, 2020 on Job Creation (the “Job Creation Law”) as Law 7/2021 amends several laws relating to taxation.
Law 7/2021 amends, among others, Law No. 6 of 1983 dated December 31, 1983 on General Provisions and Procedures of Taxation as amended several times, lastly by the Job Creation Law (the “KUP Law”). This Newsflash discusses the changes of the KUP Law under Law 7/2021. Below are the salient points of changes to the KUP Law.
- NIK as Tax Registration Number
Under Law 7/2021, an individual’s Residence Master Number (or in Bahasa Indonesia Nomor Induk Kependudukan or “NIK” in short) will be the individual’s tax registration number (or in Bahasa Indonesia Nomor Pokok Wajib Pajak or “NPWP”). We are uncertain whether existing NPWPs for individuals will be replaced by NIKs.
There will be a coordination between the Minister of Finance (the “MOF”) and the Minister who is in charge of the residents’ data to implement the use of NIKs as NPWPs. The implementation will be set out in a Government Regulation.
- Certain Aspects of Tax Underpayment Determination Letters
Law 7/2021 now clarifies that a tax underpayment determination letter (an “SKPKB”) is issued after an audit is done. Previously, it was unclear of an audit was required in certain matters.
- Clarification on Interests Imposed on Certain Matters
Law 7/2021 now clarifies the applicable interest rates as the administrative sanction that the MOF may impose in the event a taxpayer fails to submit a tax return timely, any payable value added tax (the VAT), and non-compliance under Articles 28 or 29 of the KUP Law. In such event, the interests shall be the monthly interest rate determined by the MOF plus 20% and divided by 12. The maximum interest period is 24 months.
- Failure to Pay Tax Installments is Subject to Tax Demand Letter
If a taxpayer fails to make the full payment of installments of tax as approved by the Tax Office then the Tax Office may issue a Tax Demand Letter (an “STP” in short in Bahasa Indonesia).
- Collection Cooperation with Other Countries
The MOF may cooperate with any other country for the collection of taxes (both those of Indonesia or of the other country) on a reciprocity basis under a bilateral or multilateral agreement.
- Reduction of Administrative Sanctions in Tax Objections
The amount of the administrative sanction that a taxpayer has to pay if a decision on objection (an “Objection Decision”) rejects or partially grants the taxpayer’s objection is reduced to 30% of the amount of the tax. If the taxpayer appeals to such Objection Decision, then the 30% fine is not payable.
- Time Limit for Tax Office to Provide Basis of Objection Decisions
The Directorate General of Taxatin (the “DGT”) now has 1 month to provide the basis of an Objection Decision if such information is requested by the relevant taxpayer.
- Reduction of Administrative Sanctions in Tax Appeals
The amount of the administrative sanction that a taxpayer has to pay if a decision on a tax appeal (an “Appeal Decision”) rejects or partially grants the taxpayer’s appeal is reduced to 60% of the amount of the tax. If the taxpayer submits a judicial reconsideration (peninjauan kembali) in respect of such Appeal Decision, the enforcement of the Appeal Decision is not stayed or discontinued. In other words, the taxpayer is required to pay the amounts of the tax and the administrative sanction.
- Administrative Sanctions in Judicial Reconsiderations
If under a judicial reconsideration decision (a “JR Decision”) a taxpayer is required to pay an additional tax, such additional amount is subject to the administrative sanction of 60% of the amount of the tax less any amount of tax that the taxpayer has paid. The DGT shall issue an STP in respect of such administrative sanction within 2 years from the date of the JR Decision.
- Mutual Agreement Procedures
The DGT is authorized to implement mutual agreement procedures (the “MAP”) in order to resolve any issue in the implementation of a tax treaty. The MAP may be initiated by a taxpayer, the DGT, or an authorized person of a partner country. After the MAP is completed, the DGT shall issue a decision regarding the mutual agreement.
- Appointments of Parties to Withhold Taxes
The MOF may appoint a party (an “Appointed Party”) to withhold, collect, pay, and/or report taxes. An Appointed Party is a party that is directly involved in, or facilitates, transactions between other parties. An Appointed Party may be either a resident or non-resident of Indonesia. An Appointed Party is subject to the provisions of the KUP Law (including the provisions on the tax collection, legal actions, and sanctions).
In addition, if an Appointed Party is an electronic system organizer, any non-compliance by such Appointed Party may subject the Appointed Party to access discontinuation.
- Clarification on Prosecution of Tax Crimes
It is now clarified that the trigger of prosecution of a tax crime is the delivery of a letter of investigation commencement (in Bahasa Indonesia in short an “SPDP”) to the public prosecutor or a respondent of an SPDP by the Police.
- Freezing of Assets by Tax Investigators
A tax investigator is now authorized to freeze assets of a suspect of a tax crime in accordance with applicable laws and regulations on freezing and seizure of assets.
- Monetary Fines Not Replaceable with Incarceration
Any fines imposed on a taxpayer under Articles 39 and 39A of the KUP Law may not be replaced with incarceration (kurungan).
- Hearings In Absentia
If a defendant of any tax crime has been properly summoned properly and the defendant is absent without a valid reason, the case will proceed and be decided in absentia.
- Implementing Regulations
Matters described above will be governed in more detail in MOF Regulations.
We will circulate Newsflashes on other topics of Law 7/2021 in due course.
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November 12, 2021
Please contact Johannes C. Sahetapy-Engel (jsahetapyengel@aksetlaw.com) for further information.
Disclaimer:
The foregoing material is the property of AKSET and may not be used by any other party without prior written consent. The information herein is of general nature and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. Specific legal advice should be sought by interested parties to address their particular circumstances.
Any links contained in this document are for informational purposes and are available and relevant at time this publication is made. We provide no liability whatsoever in respect of any information or content in such links.
Law on Harmonization of Taxation Regulations – General Taxation Provisions
DKI Jakarta Is Now Covid-19 PPKM Level 1
With the Corona Virus Disease 2019 (Covid-19) Pandemic seemingly abating, the Government has incrementally relaxed its previously stringent public activity restrictions policies. Under the Minister of Home Affairs (the “MOHA”) Instruction No. 57 of 2021 dated November 1, 2021 on the Enactment of Level 3, Level 2 and Level 1 Covid-19 Public Activity Restriction (Pemberlakuan Pembatasan Kegiatan Masyarakat or “PPKM”) in the Java and Bali Areas (“Instruction No. 57/2021”), the Government determines a specific Level (from Levels 1 to 3) for each area in Java and Bali based on the severity of the pandemic in such areas.
The determination for each area’s level depends on each area’s Covid-19 management efforts, and with Instruction No. 57/2021 each area’s vaccination rate is also a determining factor for its level. For a Level 3 area to become a Level 2 area, at minimum 50% of residents must receive the 1st vaccine dose, and at least 40% of such residents are over 60 years old. Meanwhile for a Level 2 Area to become a Level 1 Area, at minimum 70% of the area’s residents must receive the 1st vaccine dose, and at least 60% of such residents are over 60 years old.
DKI Jakarta currently is at the Level 1 status. Instruction No. 57/2021 also stipulates the limitations for each activity on each level. In DKI Jakarta, this is further implemented through DKI Jakarta Governor Decree 1312 of 2021 dated November 1, 2021 on the Level 1 Covid-19 PPKM (“Decree No. 1312/2021”). We set out below a summary of public activity limitations in DKI Jakarta under Instruction No. 57/2021 and Decree No. 1312/2021
| No. | Activity | Description |
| 1. | Activities in Offices* | · 75% Work From Office (“WFO”) capacity for Non-Essential sectors;
· 100% WFO capacity for Essential Sectors in offices dealing with public while 75% WFO capacity for Essential Sectors in offices dealing with administrative activities; · 100% WFO capacity for capital market, information technology, communication, non-quarantine hotels, exports and export support industry; and · 100% WFO capacity for Critical Sectors. |
| 2 | Educational Activities | · Limited face to face learning/long distance learning may be held based on Minister of Education and Cultural Affairs, Minister of Religion, Minister of Health and MOHA Joint Decree No. 03/KB/2021, No. 384 of 2021, No. HK.01.08/MENKES/4242/2021, No. 440-717 of 2021 on Guidelines for the Implementation of Education During Covid-19; and
· SDLB, MILB, SMPLB, MALB and PAUD are exempted from the above and have their own respective limitations. |
| 3 | Activities in Daily Necessities Sector | · Supermarkets and similar stores carrying daily necessities may operate at 100% capacity;
· Pharmacies and drugstores may open for 24 hours; · Community markets carrying non-daily necessities may operate at 100% capacity; and · Street vendors are allowed to open. |
| 4 | Dining Activities in Public Places | · Food stalls may open for dine in until 22.00 WIB at 75% capacity;
· Indoor or outdoor restaurants/cafes may open until 22.00 at 75% capacity; and · Restaurants/cafes that open at night may open from 18.00 until 00.00 WIB at 75% capacity. |
| 5 | Activities in Shopping Malls | · May operate at 100% capacity;
· Children under the age of 12 must be accompanied by an adult; and · Play centers may open, provided that parents must disclose their addresses and phone numbers for tracing purposes. |
| 6 | Activities in Cinemas | · May operate at 70% capacity and only people who are categorized as “green” or “yellow in the PeduliLindungi Application are allowed to enter;
· Children under the age of 12 must be accompanied by parents; and · Restaurants/Cafes within a Cinema may open at 75% capacity with a maximum dine in duration of 60 minutes. |
| 7 | Construction Activities | · May operate at 100% capacity. |
| 8 | Religious Activities | · Communal religious activities may be held throughout the duration of Level 1 PPKM at 75% capacity. |
| 9 | Activities in Health Service Facilities | · May operate at 100% capacity. |
| 10 | Activities in Public Areas that May Amass Crowds | · Public facilities may operate at 75% capacity;
· Wedding receptions may operate at 75% capacity; · Art/culture/sports/social locations may operate at 75% capacity; and · Gyms/fitness centers may operate at 75% capacity. |
| 11 | Activities in Modes of Transport | · Public/Mass Transport, Taxis and Rental Cars may operate at 100% capacity; and
· Ojek (bike taxis) are to implement more stringent health protocols. |
*Office sectors are divided to the Non-Essential, Essential and Critical Sector. Essential Sector include financial, banking, capital markets, information technology, communication, non-quarantine hotel and export/export support sectors. Critical Sectors include health, safety and order, disaster management, energy, logistics, post, transportation and distribution, food and beverage (including for farms and animals), fertilizers and petrochemical, cement and construction materials, national vital objects, national strategic projects, construction and basic utilities sector.
Specifically to support Covid-19 Management in work areas, the Manpower, Transmigration and Energy Office of DKI Jakarta issued Decree No. 3040 of 2021 dated November 1, 2021 on Covid-19 Management and Prevention Protocols in Private, State Owned and Regionally Owned Offices During the Level 1 Covid-19 PPKM (“Decree No. 3040/2021”). Decree No. 3040/2021 mainly requires offices to form a Covid-19 Task Force in charge of ensuring that all offices spaces are compliant with current health protocols (such as sanitation and maximum capacity policies). Furthermore, the Covid-19 Task Force is required to report regularly to the relevant authorities regarding the implementation of Covid-19 Management in the respective offices.
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November 8, 2021
Please contact Johannes C. Sahetapy-Engel (jsahetapyengel@aksetlaw.com) or Caleb K. N. Sitorus (csitorus@aksetlaw.com) for further information.
Disclaimer:
The foregoing material is the property of AKSET and may not be used by any other party without prior written consent. The information herein is of general nature and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. Specific legal advice should be sought by interested parties to address their particular circumstances.
Any links contained in this document are for informational purposes and are available and relevant at time this publication is made. We provide no liability whatsoever in respect of any information or content in such links.
DKI Jakarta Is Now Covid-19 PPKM Level 1
Latest Guidelines on International Travels
To further support COVID-19 Task Force Circular Letter No. 18 of 2021 dated August 11, 2021 on Health Protocols for International Travels During the Corona Virus Disease 2019 (Covid-19) Pandemic and its addendum (“CL 18/2021”), the Minister of Transportation (the “MOT”) established several international air travel protocols through its Circular Letter No. 74 of 2021 dated September 13, 2021 on Guidelines for the Implementation of International Travels Via Air Transport During the Corona Virus Disease 2019 (Covid-19) Pandemic as amended by MOT Circular Letter No. 77 of 2021 dated September 20, 2021 (collectively, “CL 74/2021”).
CL 74/2021 sets out the procedures on how international air travels specifically should be conducted. CL 74/2021 provides the guidelines for three separate categories, namely international air travels, airline operators, cargo planes arriving from countries with high Covid-19 infections rates. We set out below the key provisions of CL 74/2021.
- International Air Travel Guidelines
CL 74/2021’s provisions regarding air travel largely mirror the provisions for international travel in the CL 18/2021. In short, only certain foreign nationals (those that are fully vaccinated, are part of the Travel Corridor Arrangement Scheme, or have special permit from relevant institutions) may enter Indonesia. Furthermore, both Indonesian and foreign nationals must undergo stringent travel health protocols, as follows:
- present a vaccine certificate or are willing to be vaccinated upon arrival in Indonesia;
- present a negative RT-PCR test from country of origin within 3 x 24 hours before departure;
- download and use the Pedulilindungi application;
- fill out the Electronic-Health Alert Card (e-HAC) form through the Pedulilindungi app or manually in the airport of the country of departure;
- receive an RT-PCR test upon arrival and under 8 x 24 hours of quarantine in designated quarantine locations;
- Airline Operator Guidelines
In addition to air travel, CL 74/2021 sets out provisions for airline operators. These provisions refer to the MOT Circular Letter No 13 of 2020 dated June 8, 2020 on Air Transport Operations During the Productive and Safe From Covid-19 Public Activity Period (“CL 13/2020”) under which airlines are required to, among others, maintain and improve airplane cleanliness, have available a Universal Precaution Kit, implement regular monitoring and sanitizing protocols, require crew to follow health protocols and a number of other provisions.
In addition, CL 74/2021 requires airline operators to inform passengers to utilize the Pedulilindungi application, inspect passengers for their vaccine certificates, relay passenger data and arrival plans to relevant airport authorities, handle passengers not fulfilling travel requirements appropriately.
- Cargo Planes Coming from Countries with High Infection Rates
Cargo planes that are arriving from high infection countries must park in isolated parking areas that are far removed from the parking areas of standard and regular flights. Furthermore, similar to airline operators, they are also required to relay flight information to relevant authorities and carry out existing health protocols.
The above provisions show the government’s intent on having airline operators aid in mitigating the risk of infected passengers through disclosing passenger information, screening passengers and also informing passengers regarding health protocols.
As the latest update in connection with the above these regulations, the MOT, following certain other countries such as Australia, Japan and the Philippines, issued a letter on September 29, 2021 under which the MOT limits the number of passengers an airline may carry to a maximum of 90 passengers per flight. This is applicable specifically for international arrivals in the Soekarno Hatta Airport.
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October 4, 2021
Please contact Johannes C. Sahetapy-Engel (jsahetapyengel@aksetlaw.com) or Caleb K. N. Sitorus (csitorus@aksetlaw.com) for further information.
Disclaimer:
The foregoing material is the property of AKSET and may not be used by any other party without prior written consent. The information herein is of general nature and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. Specific legal advice should be sought by interested parties to address their particular circumstances.
Any links contained in this document are for informational purposes and are available and relevant at time this publication is made. We provide no liability whatsoever in respect of any information or content in such links.
Latest Guidelines on International Travels
New Foreign Manpower Utilization Plan Approval Request Policy During COVID-19 Pandemic
On September 24, 2021, the Minister of Manpower (the “MOM”) issued Circular Letter No. M/11/HK.04/IX/2021 regarding the Foreign Manpower Utilization Plans (Rencana Penggunaan Tenaga Kerja Asing or an “RPTKA”) Approval Service During the Corona Virus Disease 2019 (COVID-19) Spread Handling (“Circular Letter 11/2021”). Circular Letter 11/2021 allows the approvals for certain RPTKAs. Previously, under MOM Circular Letter No. M/3/HK.04/II/2021 regarding the Foreign Manpower Utilization Service in the Prevention of the Entry of Corona Virus Disease 2019 (COVID-19) (“Circular Letter 3/2021”), the MOM had discontinued accepting new applications of RPTKA Approvals except for expatriates who worked in National Strategic Projects (Proyek Strategis Nasional or “PSN”) and strategic/national vital objects with written considerations or specific permits from the relevant ministries/government institutions, for employers to apply for RPTKA Approvals for expatriates who were already in Indonesia.
Below is the summary of Circular Letter 11/2021.
- New RPTKA Approval Requests
Under Circular Letter 11/2021 new applications for RPTKA Approvals may be requested by employers for the following:
- Expatriates who work in PSNs and National Vital Objects based on a recommendation from the ministry that manages the coordination, synchronization, and handling of ministry affairs in the fields of maritime and investment (i.e., the Coordinating Ministry of Maritime and Investment Affairs); or
- Expatriates who have other specific and urgent reasons based on the recommendation from the relevant ministry/government institution.
However, RPTKA Approvals would not be granted for expatriates from certain countries with high COVID-19 spread according to the determination of the Minister of Law and Human Rights.
- Extension of Existing RPTKA Approvals
Similar to Circular Letter 3/2021, Circular Letter 11/2021 also allows employers to request for the extension of existing RPTKA Approvals for expatriates who are already in Indonesia.
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October 4, 2021
Please contact Johannes C. Sahetapy-Engel (jsahetapyengel@aksetlaw.com) or Alfan Zakiyanto (azakiyanto@aksetlaw.com) for further information.
Disclaimer:
The foregoing material is the property of AKSET and may not be used by any other party without prior written consent. The information herein is of general nature and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. Specific legal advice should be sought by interested parties to address their particular circumstances.
Any links contained in this document are for informational purposes and are available and relevant at time this publication is made. We provide no liability whatsoever in respect of any information or content in such links.
Use of National Residence Numbers and Taxpayer Identification Numbers in Public Service
The President of the Republic of Indonesia issued Presidential Regulation No. 83 of 2021 concerning Inclusion and Utilization of National Residence Numbers and/or Taxpayer Identification Numbers in Public Service (“PR 83/2021”) on September 9, 2021. PR 83/2021 aims at implementing a standardized and integrated use of the National Residence Numbers (each, an “NIK”) and Taxpayer Identification Numbers (each, an “NPWP”) in public services to fulfill the basic rights and needs of the citizens and residents of the Republic of Indonesia.
The use of a standardized and integrated NIK and/or NPWP is as a reference to the unique data identity of a citizen and resident of the Republic of Indonesia as one of the reference codes in public services. The use of NIKs and/or NPWPs is also aimed at supporting the Indonesian One Data Policy contemplated in Presidential Regulation No. 39 of 2019 dated June 17, 2019 (“PR 39/2019”). Article 2 of PR 39/2019 states that Indonesian One Data Policy was made to regulate the implementation of data governance produced by Central Agencies and Regional Agencies to support planning, implementation, evaluation, and control of development.
Below, we set out the key provisions of PR 83/2021:
- Addition and Inclusion of NIKs and/or NPWPs for Public Service Recipients
The addition and inclusion of NIKs and/or NPWPs is intended as the identity marker for every given public service in Indonesia upon a proposed public service application or for every recipient of public service whose status is still active in Indonesia.
The provisions on the addition and inclusion of NIK and/or NPWP are as follows:
- An NIK as an identity marker for an individual who does not yet have an NPWP;
- An NIK and an NPWP as an identity marker for an individual who has an NPWP; and
- An NPWP as an identity marker for a foreign entity and individual who does not have an NIK.
- Validation of NIKs and/or NPWPs
A public service provider submits the given NIK and/or NPWP for validation to the Ministry of Internal Affairs through the Directorate General of Public and Civil Registry for NIKs, and to the Ministry of Finance through the Directorate General of Taxation for NPWPs.
- The Utilization of Data That Have Included NIK and/or NPWP
The data of public service recipients that included the validated NIKs and/or NPWPs may be used for:
- prevention of Corruption;
- prevention of Money Laundering;
- tax purposes;
- updating the Identity Data in the Data Population; and
- any other purposes in accordance with applicable laws and regulations.
The data of a public service recipient must be kept secured and confidential by a public service provider in accordance with the laws and regulations. The regulations also stipulate that every public service provider must complete the inclusion of NIKs and/or NPWPs for each public service recipient data whose status is still active in Indonesia within 2 years since the issuance of PR 83/2021.
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October 1, 2021
Please contact Johannes C. Sahetapy-Engel (jsahetapyengel@aksetlaw.com) or Ammarsyarif Ghazyandra Goenawan (agoenawan@aksetlaw.com) for further information.
Disclaimer:
The foregoing material is the property of AKSET and may not be used by any other party without prior written consent. The information herein is of general nature and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. Specific legal advice should be sought by interested parties to address their particular circumstances.
Any links contained in this document are for informational purposes and are available and relevant at time this publication is made. We provide no liability whatsoever in respect of any information or content in such links.