Database

Regulation 02/M-IND/PER/1/2014 restricts the participation of foreign suppliers in public procurement. It states that domestic service suppliers should always be prioritized in public procurement. Only if no domestic service suppliers are participating in the procurement, national service suppliers (with at least 10% of shares belonging to Indonesians) are be taken into consideration. Only once these are unavailable as well, foreign service suppliers are allowed in the procurement process (Art. 16(1)).

Export financing is granted only to domestic companies. Thus, to be considered for credit, the investor shall constitute a legal entity in Indonesia.

The Indonesian tax authority issued the Circular Letter 4/2017. The Circular is addressed to Over-the-Top Services. Under the Circular, foreign Over-the-Top Services that come within the meaning of permanent establishment under the Circular are subject to Indonesian tax. Entities are also considered as permanent establishments if they provide any form of services for period of 60 days or more within any given 12 month period. It is reported that the law has the objective obtain tax revenue from foreign online businesses such as the social media giants. Additionally, Indonesia’s finance minister of finance recently called for digital services companies to permanently establish themselves in Indonesia, or else face a blockage of services.