Indonesia-Business Environment

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Published: 06 Oct 2008 17:42:02 PST

Standards

Domestic framework and international association

Legal framework

Independence of justice: Indonesia is a unitary Republic state based on parliamentary democracy with Presidential form of government. Indonesia (official name: Republic of Indonesia) with its 440 governing districts provides lot of decentralisation.
President is both the chief of the state and the head of the government. President enjoys the executive powers. President appoints the cabinet. Both President and the Vice-President are elected through a direct vote for five-year terms. President is the commander-in-chief of the armed forces and responsible for domestic governance and policy-making and foreign affairs.
The legislature in Indonesia is bicameral. The parliament called People's Consultative Assembly (MPR) consists of: DPR (House of Peoples Representatives lower house) having 550 seats with its members elected directly to serve five-year terms, and DPD (House of Regional Representatives- upper house) having 128 seats with each province electing 4 members on a non-party basis. President cannot dissolve the parliament but the President has the power to veto acts of the legislature, and in turn a supermajority of legislators may act to override the veto.The people of Indonesia have limited political rights.
The judiciary is not completely independent in Indonesia. The main source of the law is the constitution of 1945 which has gone through a series of amendments. The countrys legal system is based on Roman-Dutch law, again modified several times. The country does not accept compulsory ICJ jurisdiction. The judicial language in the country is Bahasa Indonesia; having an interpreter is always possible.
Indonesia is not ruled by law. Foreign nationals in the country cannot expect a fair trial from the countrys judicial system. A considerable degree of corruption exists in the country, including judiciary and both corporate and public sector.
Equal treatment of nationals and foreigners: Indonesia is a unitary Republic state based on parliamentary democracy with Presidential form of government. Indonesia (official name: Republic of Indonesia) with its 440 governing districts provides lot of decentralisation.
President is both the chief of the state and the head of the government. President enjoys the executive powers. President appoints the cabinet. Both President and the Vice-President are elected through a direct vote for five-year terms. President is the commander-in-chief of the armed forces and responsible for domestic governance and policy-making and foreign affairs.
The legislature in Indonesia is bicameral. The parliament called People's Consultative Assembly (MPR) consists of: DPR (House of Peoples Representatives lower house) having 550 seats with its members elected directly to serve five-year terms, and DPD (House of Regional Representatives- upper house) having 128 seats with each province electing 4 members on a non-party basis. President cannot dissolve the parliament but the President has the power to veto acts of the legislature, and in turn a supermajority of legislators may act to override the veto.The people of Indonesia have limited political rights.
The judiciary is not completely independent in Indonesia. The main source of the law is the constitution of 1945 which has gone through a series of amendments. The countrys legal system is based on Roman-Dutch law, again modified several times. The country does not accept compulsory ICJ jurisdiction. The judicial language in the country is Bahasa Indonesia; having an interpreter is always possible.
Indonesia is not ruled by law. Foreign nationals in the country cannot expect a fair trial from the countrys judicial system. A considerable degree of corruption exists in the country, including judiciary and both corporate and public sector.
The language of justice: Indonesia is a unitary Republic state based on parliamentary democracy with Presidential form of government. Indonesia (official name: Republic of Indonesia) with its 440 governing districts provides lot of decentralisation.
President is both the chief of the state and the head of the government. President enjoys the executive powers. President appoints the cabinet. Both President and the Vice-President are elected through a direct vote for five-year terms. President is the commander-in-chief of the armed forces and responsible for domestic governance and policy-making and foreign affairs.
The legislature in Indonesia is bicameral. The parliament called People's Consultative Assembly (MPR) consists of: DPR (House of Peoples Representatives lower house) having 550 seats with its members elected directly to serve five-year terms, and DPD (House of Regional Representatives- upper house) having 128 seats with each province electing 4 members on a non-party basis. President cannot dissolve the parliament but the President has the power to veto acts of the legislature, and in turn a supermajority of legislators may act to override the veto.The people of Indonesia have limited political rights.
The judiciary is not completely independent in Indonesia. The main source of the law is the constitution of 1945 which has gone through a series of amendments. The countrys legal system is based on Roman-Dutch law, again modified several times. The country does not accept compulsory ICJ jurisdiction. The judicial language in the country is Bahasa Indonesia; having an interpreter is always possible.
Indonesia is not ruled by law. Foreign nationals in the country cannot expect a fair trial from the countrys judicial system. A considerable degree of corruption exists in the country, including judiciary and both corporate and public sector.
Having recourse to an interpreter: Indonesia is a unitary Republic state based on parliamentary democracy with Presidential form of government. Indonesia (official name: Republic of Indonesia) with its 440 governing districts provides lot of decentralisation.
President is both the chief of the state and the head of the government. President enjoys the executive powers. President appoints the cabinet. Both President and the Vice-President are elected through a direct vote for five-year terms. President is the commander-in-chief of the armed forces and responsible for domestic governance and policy-making and foreign affairs.
The legislature in Indonesia is bicameral. The parliament called People's Consultative Assembly (MPR) consists of: DPR (House of Peoples Representatives lower house) having 550 seats with its members elected directly to serve five-year terms, and DPD (House of Regional Representatives- upper house) having 128 seats with each province electing 4 members on a non-party basis. President cannot dissolve the parliament but the President has the power to veto acts of the legislature, and in turn a supermajority of legislators may act to override the veto.The people of Indonesia have limited political rights.
The judiciary is not completely independent in Indonesia. The main source of the law is the constitution of 1945 which has gone through a series of amendments. The countrys legal system is based on Roman-Dutch law, again modified several times. The country does not accept compulsory ICJ jurisdiction. The judicial language in the country is Bahasa Indonesia; having an interpreter is always possible.
Indonesia is not ruled by law. Foreign nationals in the country cannot expect a fair trial from the countrys judicial system. A considerable degree of corruption exists in the country, including judiciary and both corporate and public sector.
Sources of the law and legal similarities: Indonesia is a unitary Republic state based on parliamentary democracy with Presidential form of government. Indonesia (official name: Republic of Indonesia) with its 440 governing districts provides lot of decentralisation.
President is both the chief of the state and the head of the government. President enjoys the executive powers. President appoints the cabinet. Both President and the Vice-President are elected through a direct vote for five-year terms. President is the commander-in-chief of the armed forces and responsible for domestic governance and policy-making and foreign affairs.
The legislature in Indonesia is bicameral. The parliament called People's Consultative Assembly (MPR) consists of: DPR (House of Peoples Representatives lower house) having 550 seats with its members elected directly to serve five-year terms, and DPD (House of Regional Representatives- upper house) having 128 seats with each province electing 4 members on a non-party basis. President cannot dissolve the parliament but the President has the power to veto acts of the legislature, and in turn a supermajority of legislators may act to override the veto.The people of Indonesia have limited political rights.
The judiciary is not completely independent in Indonesia. The main source of the law is the constitution of 1945 which has gone through a series of amendments. The countrys legal system is based on Roman-Dutch law, again modified several times. The country does not accept compulsory ICJ jurisdiction. The judicial language in the country is Bahasa Indonesia; having an interpreter is always possible.
Indonesia is not ruled by law. Foreign nationals in the country cannot expect a fair trial from the countrys judicial system. A considerable degree of corruption exists in the country, including judiciary and both corporate and public sector.

Intellectual Property

Domestic network and international agreements

Texts currently applying to patents/brands

Type	Text	Date entered into law	Period of validity	Remarks
Patent	Law No. 14 regarding Patents	August 1, 2001	:	:

Tax rates

Consumption taxes

Tax rate: 10%
Reduced tax rate: Reduced rate: 2% for retail sales, no VAT for some products (basic necessities, food served in hotel and restaurant, medical services, art and entertainment services, etc).
Other consumption taxes

Corporate taxes

Tax rate for resident companies
Tax rate on long-term capital gains: Capital gains is taxed in Indonesia from 10 to 30%.
System governing groups of companies and dividends paid by subsidiaries to their parent companies: Rate of 15%
NB: rate is 10% if the Belgian shareholders possess 25% or more of the shares in a company with Indonesian capital.
Tax rate on branches: Branch profits are taxed at the same rate as corporate profits. However, a 20% withholding branch profit tax is payable on its after tax taxable income in addition to the corporate tax. An exemption of withholding tax may be granted to a permanent establishment which reinvests its net profits in Indonesia.

Individual taxes

Tax rate
Allowable deductions and tax credit: In Indonesia the main deductions are:
Tax deduction allowance of 1,728,000 Rp for single people and 864,000 Rp for every married person.
Deduction of 648,000 Rp (maximum) or 5% of the annual income.

Double taxation treaties

Countries with whom a double taxation treaty have been signed

Sources of fiscal information

Tax Authorities

Accounting rules

Tax year: The fiscal year begins on January 1-st and ends on December 31 of the same year.
Accounting standards
Accounting reports: Financial statements must contain at least : a variation sheet of constant capital, a cash flow sheet and the annexes.
The statements include the balance sheet, the assets and liabilities account, the funds and additional information statement.
Accountancy profession: The "Indonesian Institute of Accountants" represents the profession of accountant and tries to get harmonized with the IFAC's standards.
Certification and auditing: The chartered accountant profession in Indonesia is represented only by 400 members. They have no accurate accounting model but are inspired by the American and Dutch model.
Accounting standards correspond to a brief version of the "Inventory of Generally Accepted Accounting Principles for Business Enterprises" drafted in 1964 by Paul Grady. The Accountants Association has developed 2 types of standards: one for accounting and one for audit.