Revised AEoI Rules Make It Harder for Financial Institutions to Evade

The Ministry of Finance has updated the provisions related to the mechanism of financial information exchange for tax purposes, through Minister of Finance Regulation (PMK) Number 47 Year 2024, which is effective from 6 August 2024.  This regulation amends the previous provisions contained in PMK Number 70/PMK.03/2017, PMK Number 73/PMK.03/2017 and PMK Number 19/PMK.03/2018.

Through the latest regulation, the government has further narrowed the loophole for avoiding the obligation to submit financial information. By prohibiting any party from making an agreement or conducting activities aimed at avoiding the obligations stipulated in the laws and regulations related to access to financial information for tax purposes.

This is done by adding Chapter VA on Anti-avoidance, precisely Article 30A paragraph (1) of PMK Number 47 Year 2024. Explicitly, the provision reads:

Every person including:

1. Financial Services Institution (FSI);
2. Other Financial Services Institution;
3. Other Entities;
4. Leaders and/or employees of the Financial Services Institution;
5. Leaders and/or employees of Other Financial Services Institutions;
6. Leaders and/or employees of Other Entities;
7. Individual Financial Account Holders;
8. Entity Financial Account Holder;
9. Service providers;
10. intermediary; and/or
11. other parties,

are prohibited from making agreements and/or engaging in practices with the intent and purpose of avoiding the obligations as stipulated in the laws and regulations governing access to financial information for tax purposes.

In addition to being prohibited from making agreements and carrying out avoidance practices, the parties are also prohibited from making false statements or concealing the truth of information and providing incomplete information.

Read: AEoI Implementation is No Longer Manual; Special Application Used

DGT's Authority to Review the Agreement

If DGT finds that there is an agreement or certain practices to avoid the obligation to submit financial statements, DGT will consider the agreement or practice to be invalid or not occur. In addition, the obligation to submit financial information must still be fulfilled.

In this context, according to the regulation, the DGT is authorized to determine whether an agreement or practice is intended to avoid the reporting obligation or not.

Furthermore, DGT is authorized to obtain financial information, including information or other information related to the agreement and activities between the parties related to the agreement and practice of avoiding the reporting obligation.

Supervision and Law Enforcement

To ensure that all provisions related to the obligation to submit financial information are implemented, DGT is authorized to conduct supervision. 

Supervision activities are conducted through research activities followed by a clarification request process. If the request for clarification is not fulfilled within a maximum of 14 calendar days, the Director General of Taxes will deliver a written warning to the Financial Services Institution, Other Financial Services Institution, and/or other entities.

Read Sri Mulyani: Financial Information Access Is Not For Intimidating Taxpayer!

If after receiving a warning the violation still occurs, the DGT can conduct an audit. With a note that there are indications of violations and/or not fulfilled obligations related to the submission of financial information reports.

Then, after the audit process is carried out and a tax criminal offense is revealed, the Director General of Taxes will conduct a preliminary evidence examination and can continue with the investigation process.

About AEoI

The obligation to submit financial information by FSIs, other FSIs, and other entities to DGT is part of the Automatic Exchange of Information (AEoI) program.

This activity is carried out between jurisdictions that are bound by agreements with the Indonesian government. Indonesia can send and receive financial information periodically through the agreed information system.

Therefore, the Indonesian government authorizes DGT to be able to access financial information from Financial Services Institutions, Other Financial Services Institutions, and/or other entities.

The information submitted includes the identity of the financial account holder, financial account number, identity of the reporting financial institution, balance or value of the financial account, and income related to the financial account.

The accounts subject to this policy are: 

Entity	Financial Account Type	Balance Limit
Depository Financial Institution	Held by individual	≥ IDR 1 billion
	Held by entity	No limit
Certain Insurance Company	Held by individual/entity	≥ IDR 1 billion
Custodian Institutions and Investment Entities	Held by individual/entity	No limit

To be able to submit financial statements to DGT, reporting financial institutions are required to register themselves directly, through an electronic system, or post and expedition services. (ASP/AUD)