Regulation No.35/PMK.03.2019 is intended to help identify what constitutes a permanent establishment with respect to the business activities conducted by foreign entities in Indonesia.
The guidelines provided by the regulation do not affect the definition of what constitutes a permanent establishment or the procedures that a permanent establishment must follow (such as registration for a tax identification number or as a VAT-able entrepreneur). The regulation clarifies certain common terms such as:
The regulation also provides guidance that clarifies the rules for construction, installation or assembly projects and the rules for insurance agents.
Under the income tax law, any individual who performs services in Indonesia on behalf of a foreign entity for a period longer than 60 days within any 12-month period may be deemed to be a permanent establishment (unless a provision of an income tax treaty applies). The regulation clarifies that for determining the number of days, part of a day is counted as one day, and if the period is calculated in months, part of a month is counted as one month.
Read a July 2019 report [PDF 735 KB] prepared by the KPMG member firm in Indonesia
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