Revisions to PP 55/2022 Reduce the Risk of Tax Bribery

The Directorate General of Tax (Direktorat Jenderal Pajak– “ DJP ”) of the Ministry of Finance (“ Kemenkeu ”) has confirmed revisions to several provisions under Government Regulation No. 55 of 2022 on Adjustment of Regulations in the Field of Income Tax (“ PP 55/2022 ”). One of the key amendments introduces a new article that explicitly prohibits the deduction of bribery and gratuity expenses from gross income, aligning Indonesia’s framework with the accession requirements of the Organisation for Economic Co-operation and Development (“ OECD ”).

“We have incorporated all anti-bribery management system standards in line with OECD standards, into the regulatory framework that we are refining,” said Bimo Wijayanto, the Director General of Tax, toHukumonline.

Therefore, the government has proposed amendments to Article 57 paragraphs (1) and (2) to restructure the subjects eligible for the 0.5% Final Income Tax (Pajak Penghasilan– “ PPh ”) facility, including the introduction of an anti-avoidance rule to exclude taxpayers who may potentially engage in tax avoidance. This amendment also aligns the applicable tax provisions with global standards to combat base erosion and profit shifting (BEPS) practices.