The Significant Laws and Regulations Changes

  • SIGNIFICANT CHANGES TO LAW REGULATION

    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:

    a. VAT rate increases to 11% effective April 1, 2022;

    b. At the latest on January 1, 2025, the VAT rate will be 12%;


    SIGNIFICANT ACCOUNTING POLICIES CHANGES

    The consolidated financial statements have been prepared and presented in accordance with Indonesian Financial Accounting Standards (“SAK”), which comprise the Statements and Interpretations issued by the Financial Accounting Board of the Indonesian Institute of Accountants (DSAK) and 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, 2023, including the following new and/ or revised standards that have affected the consolidated financial statements of the Company. 

    Effective beginning on or after January 1, 2023

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

    This amendments provide guidance to help entities apply materiality judgements to accounting policy disclosures.

    The amendments aim 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 have had an impact on the Company’s disclosures of accounting policies, but not on the measurement, recognition or presentation of any items in the Company’s financial statements.

    Amendments to PSAK 16: Fixed Assets - Proceedsbefore 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.

    These amendments had no impact on the consolidated financial statements of the Company as there was no sales of items produced by fixed assets while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management on or after the beginning of the earliest period presented. 

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

    The amendments to PSAK 25 clarify the distinction between changes in accounting estimates, changes in accounting policies and the correction of errors. They also clarify how entities use measurement techniques and inputs to develop accounting estimates.

    The amendments had no impact on the Company’s consolidated financial statements.

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

    The amendments to PSAK 46 narrow the scope of the initial recognition exception, so that it no longer applies to transactions that give rise to equal taxable and deductible temporary differences such as leases and decommissioning liabilities.

    The amendments had no impact on the Group’s consolidated financial statements. 

    The amendments to PSAK 46 had been introduced in response to the Pillar Two Rules, issued by Organization for Economic Co-operation and  Development (OECD), and include:
    i) An exception to the recognition and disclosure of deferred taxes related to the Pillar Two income taxes; and
    ii) Disclosure requirements for affected entities to help users of the financial statements better understand an entity’s exposure to Pillar Two income taxes arising from that legislation, particularly before its effective date.


    The exception - the use of which is required to be disclosed - applies immediately upon the issue of these amendments. The remaining disclosure requirements apply for annual reporting periods beginning on or after January 1, 2023, but not for any interim periods ending on or before December 31, 2023.

    As of December 31, 2023, the Pillar Two income taxes legislation has not yet been enacted or has not yet substantively enacted in Indonesia where the Company operates. Therefore, the Company is still in the process of assessing the potential exposure to Pillar Two income taxes. The potential exposure, if any, to Pillar Two income taxes is currently not known nor reasonably  estimable.


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  • The Significant Laws and Regulations Changes
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