The Significant Laws and Regulations Changes

  • SIGNIFICANT ACCOUNTING POLICIES CHANGES

    On March 31, 2020, the Government of Indonesia issued Government Regulation in Lieu of the Republic of Indonesia Law Number 1 of 2020 which stipulates, among other things, the reduction of tax rates for corporate income taxpayers and permanent establishments of entities from the previous 25% to 22% for the 2020 fiscal year and 2021 and 20% from fiscal year 2022 onwards, and a further reduction of 3% for corporate income tax payers who meet certain criteria.

    Furthermore, on October 29, 2021, the Government of Indonesia ratified Law No. 7 of 2021 concerning the Harmonization of Tax Regulations (HPP), which among other things regulate the domestic corporate income tax for Taxpayers and Permanent Business Entities of 22% for the fiscal year 2022 and so on. The HPP Law also regulates changes to the Law on Value Added Tax (VAT) on Goods and Services and Sales Tax on Luxury Goods (UU PPN and UU PPN BM), which are as follows:

    • VAT rate increases to 11% effective April 1, 2022;
    • At the latest on January 1, 2025, the VAT rate will be 12%.


    SIGNIFICANT ACCOUNTING POLICIES CHANGES

    The consolidated The consolidated financial statements have been prepared and presented in accordance with Indonesian Financial Accounting Standards (“SAK”), which comprise the Statements of Financial Accounting Standards (“PSAK”) and Interpretations to Financial Accounting Standards (“ISAK”) issued by the Financial Accounting.

    Board of the Indonesian Institute of Accountants and Rule No. VIII.G.7 Attachment of Chairman of Bapepam and LK Decree No. KEP-347/BL/2012 dated June 25, 2012 on the Regulations and Guidelines on Financial Statement Presentation and Disclosures issued by Financial Service Authority (“OJK”).

    The Company made first time adoption of all the new and/or revised standards effective for the periods beginning on or after January 1, 2022, including the following new and/or revised standards that have affected the consolidated financial statements of the Company.

    Amendments to PSAK 22: Business Combinations regarding Reference to Conceptual Frameworks 

    The amendments to PSAK 22 Business Combinations regarding Reference to Conceptual Frameworks clarify the interactions between PSAK 22, PSAK 57, ISAK 30 and the Conceptual Framework of Financial Reporting. 

    In general, the amendments to PSAK 22:

    • Add a description regarding “liabilities and contingent liabilities within the scope of PSAK 57 or ISAK 30”.
    • Clarifying the contingent liabilities recognized at the acquisition date.
    • Adds definition of contingent asset and its accounting treatment.

    The amendments to PSAK 22 Business Combinations regarding References to Conceptual Frameworks will become effective on January 1, 2022 with earlier application permitted.

    Amendments to PSAK 57: Provisions, Contingent Liabilities, and Contingent Assets regarding Aggravating Contracts - Contract Fulfillment Costs

    The amendments to PSAK 57 provide that costs to fulfill an onerous contract consist of costs that are directly related to the contract, which consists of:
    • incremental costs to fulfill the contract, and
    • allocation of other costs that are directly related to fulfilling the contract.

    Amendments to PSAK 57 is effective on January 1, 2022 with earlier application permitted.

    2020 Annual Revision - PSAK 71: Financial Instruments

    The amendment clarifies the fees that an entity includes when assessing whether the modified terms of a financial liability required derecognition of the original financial liability and recognition of a new financial liability. These fees include only those paid or received between the borrower and the lender, including fees paid or received by either the borrower or lender on the other’s behalf. 

    The amendment is effective for annual reporting periods beginning on or after January 1, 2022 with earlier adoption permitted. 

    2020 Annual Improvements – PSAK 73: Leases 

    The amendment to illustrative Example 13 accompanying PSAK 73 removes from the example the illustration of the reimbursement of leasehold improvement by the lessor in order to resolve any potential confusion regarding the treatment of lease incentives that might arise because of how lease incentives are illustrated in that example. 

    An entity applies the amendment prospectively to fair value measurements on or after the beginning of the first annual reporting period beginning on or after January 1, 2022 with earlier adoption permitted but not expected to have significant impact to the financial reporting of the Company upon first-time adoption.


    Effective beginning on or after January 1, 2023

    Amendments to PSAK 1: Presentation of Financial Statements - Classification of a Liability as current or non-current.

    The amendments specify the requirements for classifying liabilities as current or non-current and clarify:
    • what is meant by a right to defer settlement,
    • the right to defer must exist at the end of the reporting period,
    • classification is not affected by the likelihood that an entity will exercise its deferral right, and
    • only if an embedded derivative in a convertible liability is an equity instrument would the terms and conditions of a liability will not impact its classification.

    The amendments are effective for annual reporting periods beginning on or after January 1, 2023 and shall be applied retrospectively.

    Amendments to PSAK 1: Presentation of Financial Statements - Classification of a Liability as current or non-current (continued)

    The amendments are not expected to have a material impact on the financial reporting of the Company. 

    Amendment of PSAK 1: Presentation of financial statement - Disclosure of accounting policies

    This amendment provides guidance and examples to help entities apply materiality judgements to accounting policy disclosures. The amendment aims to help entities provide accounting policy disclosures that are more useful by replacing the requirement for entities to disclose their ‘significant’ accounting policies with a requirement to disclose their ‘material’ accounting policies and adding guidance on how entities apply the concept of materiality in making decisions about accounting policy disclosures. 

    The amendments are effective on or after 1 January 2023 with earlier application permitted. The Group is currently assessing the impact of the amendment to determine the impact they will have on the Company’s accounting policy disclosures.

    Amendments to PSAK 16: Fixed Assets - Proceeds before Intended Use

    The amendments prohibit entities to deduct from the cost of an item of fixed assets, any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognizes the proceeds from selling such items, and the costs of producing those items, in the profit or loss.

    The amendment is effective for annual reporting periods beginning on or after 1 January 2023 and shall be applied retrospectively to items of property, plant and equipment made available for use on or after the beginning of the earliest period presented when the entity first applies the amendment.

    The amendments are not expected to have a material impact on the financial reporting of the Company

    Amendment of PSAK 25: Accounting Policies, Changes in Accounting Estimates and Errors - Definition of Accounting Estimates.

    The amendments introduces a definition of ‘accounting estimates’ and clarify the distinction between changes in accounting estimates and changes in accounting policies and the correction of errors. Also, they clarify how entities use measurement techniques and inputs to develop accounting estimates.

    The amendments are effective on or after January 1, 2023 and apply to changes in accounting policies and changes in accounting estimates that occur on or after the start of that period. Earlier application is permitted. The Company is currently assessing the impact of the amendment to determine the impact they will have on the Group’s financial reporting.

    Amendment of PSAK 46: Income Taxes – Deferred Tax related to Assets and Liabilities arising from a Single Transaction

    This amendment proposes that entities recognize deferred tax assets and liabilities at the time of initial recognition, for example from a lease transaction, to eliminate differences in current practice for such transactions and similar transactions.

    The amendments are effective for annual reporting periods beginning on or after January 1, 2023 with early adoption permitted. The Group is currently assessing the impact of the amendment to determine the impact they will have on the Company’s financial reporting.


    Effective beginning on or after January 1, 2024

    Amendment of PSAK 1: Presentation of Financial Statements - Non-current Liabilities with Covenants

    This amendment clarifies that only covenants with which entities must comply on or before the reporting date will affect a liability’s classification as current or non-current.

    Entities apply retrospectively amendments to PSAK 1 (October 2020) regarding the classification of a liability as current or non-current for financial reporting starting on or after January 1, 2024 in accordance with PSAK 25. If entities apply the amendments to PSAK 1 (October 2020) in a period that earlier after the issuance of the amendment to PSAK 1 (December 2022) regarding non-current liabilities with covenants, entities also apply the amendment to PSAK 1 (December 2022) in that period. If entities apply the amendments to PSAK 1 (October 2020) for the previous period, the entity shall disclose this fact.

    The amendments are effective for annual reporting periods beginning on or after January 1, 2024 with early adoption permitted. The Group is currently assessing the impact of the amendment to determine the impact they will have on the Company’s financial reporting.

    Amendment of PSAK 73: Leases - Lease Liability in a Sale and Leaseback

    The amendment to PSAK 73 Leases specifies the requirements that a seller-lessee uses in measuring the lease liability arising in a sale and leaseback transaction, to ensure the seller-lessee does not recognize any amount of the gain or loss that relates to the right of use it retains.

    The amendment applies retrospectively to annual reporting periods beginning on or after 1 January 2024. Earlier application is permitted. The Group is currently assessing the impact of the amendment to determine the impact they will have on the Group’s financial reporting.


    Effective beginning on or after January 1, 2025

    PSAK 74: Insurance Contracts

    A comprehensive new accounting standard for insurance contracts covering recognition and measurement, presentation and disclosure, upon its effective date, PSAK 74 will replace PSAK 62: Insurance Contracts. PSAK 74 applies to all types of insurance contracts, life, non-life, direct insurance and re-insurance, regardless of the entities issuing them, as well as to certain guarantees and financial instruments with discretionary participation features, while a few scope exceptions will apply.

    The overall objective of PSAK 74 is to provide an accounting model for insurance contracts that is more useful and consistent for insurers.

    PSAK 74 is effective for reporting periods beginning on or after 1 January 2025, with comparative figures required. Early application is permitted, provided the entity also applies PSAK 71 and PSAK 72 on or before the date it first applies PSAK 74. This standard is not expected to have any impact to the financial reporting of the Group upon first-time adoption.



    -j23-

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