Indonesia releases CRS regulations and explanatory notes

On 8 May 2017, the Government of Indonesia enacted Government Regulation in Lieu of Law (Peraturan Pemerintah Pengganti Undang-Undang – PERPPU) No. 1 Year 2017 about Financial Information Access for Taxation Matter (Akses Informasi Keuangan untuk Kepentingan Perpajakan) (Link to Regulations – Indonesian).  The PERPPU is highly anticipated as it acts as the foundation for the Indonesian finance industry, financial authority, and tax authority to modernize and amend their means of conduct toward financial information secrecy in relation to tax matters, including the approach to addressing Automatic Exchange of Information (“AEoI”) schemes such as the Common Reporting Standard (“CRS”) and other taxation and transparency objectives.

This PERPPU revokes certain secrecy regulations, thus, allowing the Indonesian tax authority (Direktorat Jenderal Pajak – DJP) to gain the appropriate access to financial information through regulated procedures without the need for approval from other parties such as the judicial courts, as was previously required.

Specifically regarding AEoI, the PERPPU stipulates that the identification procedures should be performed in accordance with the respective AEoI standards.  Furthermore, sanctions are introduced for financial institutions, their officers, and customers who fail to produce complete and correct data and reports, ranging from up to 1 billion IDR (approx.. 67,500€ or 75,000USD) in fines and even criminal prosecution.

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