a.

that pursuant to the provisions under Article 19 Law Number 7 of 1983 concerning Income Tax as amended several times, last amended by Law Number 17 of 2000, the Minister of Finance is authorised to enact the regulation of the re-valuation of fixed assets in the event of discrepancies between the elements of costs and income due to price developments;

b.

that the provisions stipulated under the Minister of Finance Decree Number 486/KMK.03/2002 concerning the Re-valuation of Company Fixed Assets for Tax Purposes are deemed inadequate, thereby, it is necessary to adjust/improve the policies in the field of taxation concerning the re-valuation of company fixed assets;

c.

that based on the considerations referred to in letter a and letter b, it is necessary to enact a Minister of Finance Regulation concerning Re-valuation of Company Fixed Assets for Tax Purposes;

 

 

 

1.

Law Number 6 of 1983 concerning General Provisions and Tax Procedures (State Gazette of the Republic of Indonesia of 1983 Number 49, Supplement to the State Gazette of the Republic of Indonesia Number 3262) as amended several times, last amended by Law Number 28 of 2007 (State Gazette of the Republic of Indonesia of 2007 Number 85, Supplement to the State Gazette of the Republic of Indonesia Number 4740);

2.

Law Number 7 of 1983 concerning Income Tax (State Gazette of the Republic of Indonesia of 1993 Number 50, Supplement to the State Gazette of the Republic of Indonesia Number 3263) as amended several times, last amended by Law Number 17 of 2000 (State Gazette of the Republic of Indonesia of 2000 Number 127; Supplement to the State Gazette of the Republic of Indonesia Number 3985);

3.

Government Regulation Number 138 of 2000 concerning the Calculation of Taxable Income and Settlement of Income Tax in the Current Year (State Gazette of the Republic of Indonesia of 2000 Number 253, Supplement to the State Gazette of the Republic of Indonesia Number 4055);

4.

Presidential Decree Number 20/P of 2005;

 

 

 

MINISTER OF FINANCE REGULATION CONCERNING RE-VALUATION OF COMPANY FIXED ASSETS FOR TAX PURPOSES.

 

 

 

(1)

Companies may revaluate company fixed assets for tax purposes, provided that they have fulfilled all of their tax obligations until the last taxable period before the taxable period the re-valuation is conducted.

(2)

The companies referred to in paragraph (1) are resident corporate Taxpayers and permanent establishments (PE), excluding companies that have obtained a permit to maintain bookkeeping in English and United States Dollars.

 

 

 

(1)

To revaluate company fixed assets, companies apply to the Director General of Taxes.

(2)

The Director General of Taxes is authorised to issue a decree on the re-valuation of company fixed assets upon the application submitted by the companies as referred to in paragraph (1).

 

 

 

(1)

The re-valuation of company fixed assets is conducted on:

 

a.

all tangible fixed assets, including land with ownership right or the right to build; or

 

b.

all tangible fixed assets excluding land,

 

located in Indonesia, owned and used to obtain, collect and maintain income constituting a Taxable Object.

(2)

The re-valuation of company fixed assets referred to in paragraph (1) cannot be conducted again before the 5 (five) year period has passed since the last re-valuation of company fixed assets pursuant to this Minister of Finance Regulation.

 

 

 

(1)

The re-valuation of company fixed assets must be conducted based on the market value or the reasonable value of the said fixed assets in effect at the time of the re-valuation of fixed assets determined by an appraiser service company or an appraiser that has obtained a permit from the Government.

(2)

If the market value or reasonable value determined by the appraiser service company or appraiser as referred to in paragraph (1) does not reflect the actual situation, the Director General of Taxes re-determines the market value or reasonable value of the assets concerned.

(3)

The re-valuation of company fixed assets is conducted within a maximum period of 1 (one) year from the date of the report by the appraiser service company or appraiser.

 

 

 

On the difference between the re-valuation of company fixed assets and the original tax net book value, a final Income Tax of 10% (ten per cent) is imposed.

 

 

 

Companies that due to their financial conditions cannot settle Income Tax payable as referred to in Article 5, may apply for payment in instalments for a maximum of 12 (twelve) months pursuant to the provisions under Article 9 paragraph (4) of Law Number 6 of 1983 concerning General Provisions and Tax Procedures as amended several times, last amended by Law Number 28 of 2007.

 

 

 

(1)

Since the month the re-valuation of company fixed assets is conducted, the following provisions shall apply:

 

a.

The basis for the fiscal depreciation of fixed assets that have been approved for re-valuation is the value at the time of re-valuation.

 

b.

The fiscal useful lives of fixed assets that have been subject to the re-valuation of company fixed assets are readjusted to become the full useful lives of the said group of fixed assets.

 

c.

The calculation of depreciation commences from the month the re-valuation of company fixed assets is conducted.

(2)

For the fraction of the tax year until the month before the re-valuation of company fixed assets is conducted, the following provisions shall apply:

 

a.

The basis for the fiscal depreciation of fixed assets is the basis for fiscal depreciation at the beginning of the tax year concerned.

 

b.

The remaining useful life for tax purposes of fixed assets are the remaining fiscal benefits at the beginning of the tax year concerned.

 

c.

Depreciation is calculated pro rata according to the number of months in the fraction of the tax year.

(3)

Fiscal depreciation of fixed assets that do not obtain approval for the re-valuation of company fixed assets continues to use the basis of fiscal depreciation and the remaining original fiscal benefits before the re-valuation of company fixed assets is conducted.

 

 

 

(1)

If a Company transfers fixed assets in the form of:

 

a.

Group 1 (one) and group 2 (two) fixed assets that have obtained approval for re-valuation before the end of the new useful life as referred to in Article 7 paragraph (1) subparagraph b; or

 

b.

Group 3 (three), group 4 (four) fixed assets, buildings and land that have obtained approval for re-valuation before the 10 (ten) year period elapses,

 

on the difference in the re-valuation over the original tax net book value, additional final Income Tax will be imposed with a rate equal to the highest Income Tax rate for resident corporate Taxpayers applicable at the time of re-valuation minus 10% (ten per cent).

(2)

The provisions referred to in paragraph (1) do not apply to:

 

a.

Transfers of company fixed assets that are force majeure based on Government decisions or policies or Court decisions;

 

b.

Transfers of company fixed assets in the context of a business merger, consolidation or spin-off that has received approval; or

 

c.

Withdrawal of company fixed assets from use due to severe irreparable damage.

(3)

The difference between the transfer value of company fixed assets and the tax net book value at the time of transfer is a profit or loss pursuant to the provisions under Law Number 7 of 1983 concerning Income Tax as amended several times, last amended by Law Number 17 of 2000.

 

 

 

(1)

The difference between the re-valuation of company fixed assets and the original commercial net book value after deducted by Income Tax as referred to in Article 5 must be recorded in the commercial balance sheet at the capital estimate under the name “Difference in the Re-valuation of Company Fixed Assets Dated ........”.

(2)

The granting of bonus shares or the recording of additional par value of shares without deposit from the capitalisation of the difference in the re-valuation of company fixed assets, up to the difference in the fiscal re-valuation as referred to in Article 5, is not a Taxable Object pursuant to Article 4 paragraph (1) subparagraph g of Law Number 7 of 1983 concerning Income Tax as amended several times, last amended by Law Number 17 of 2000 in conjunction with Article 1 letter b of Government Regulation Number 138 of 2000 concerning the Calculation of Taxable Income and Settlement of Income Tax in the Current Year.

(3)

If the difference in fiscal re-valuation as referred to in paragraph (2) is greater than the difference in commercial re-valuation as referred to in paragraph (1), the granting of bonus shares or the recording of additional par value of shares without deposit not constituting a Taxable Object as referred to in paragraph (2), are only conducted up to the difference in commercial re-valuation.

 

 

 

Further provisions on procedures for the applications and administration of re-valuation of company fixed assets are regulated by a Director General of Taxes Regulation.

 

 

 

For companies that have applied for a permit to revaluate company fixed assets before this Minister of Finance Regulation come into force and for the application, a decree has not been issued, it shall be processed pursuant to the Minister of Finance Decree Number 486/KMK.03/2002 concerning Re-valuation of Company Fixed Assets for Tax Purposes.

 

 

 

When this Minister of Finance Regulation comes into force, Minister of Finance Decree Number 486/KMK.03/2002 concerning Re-valuation of Company Fixed Assets for Tax Purposes, is revoked and declared invalid.

 

 

 

This Ministerial Regulation shall come into force on the date of enactment.

 

 

 

For public cognisance, this Ministerial Regulation shall be promulgated by placement in the Official Gazette of the Republic of Indonesia.

 

 

 

Enacted in Jakarta
on 23 May 2008

MINISTER OF FINANCE,

signed

SRI MULYANI INDRAWATI