close
Share with your friends

Indonesia: Regulation clarifies permanent establishment requirements

Indonesia: Permanent establishment requirements

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.

1000

Related content

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:

  • Place of business
  • Preparatory or auxiliary activities
  • Essential and significant activities

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

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us

 

Want to do business with KPMG?

 

loading image Request for proposal