Overview
Exchange of information on request (EOIR) is an essential tool for tax authorities worldwide to ensure that all taxpayers pay the correct amount of tax. With the mechanism of EOIR, a jurisdiction could make a specific request to another jurisdiction and vice versa, to obtain information regarding its related taxpayers. An EOIR can be used to obtain information regarding banking and accounting records as well as ownership of entities and legal arrangements.
Indonesia had an extensive EOI network through Double Taxation Conventions (DTC), Tax Information Exchange Agreement (TIEA), and Convention on Mutual Administrative Assistance in Tax Matters (the Multilateral Convention).
Request for Information
By Post
Director of International Taxation, Directorate General of Taxes, Gedung Mar'ie Muhammad Lantai 26, Jalan Gatot Subroto No. 40-42 Jakarta, 12190 PO BOX 124.
By e-mail
A copy of the request may be sent via e-mail to eoi@pajak.go.id. To ensure confidentiality, please encrypt the information request and provide the password in a separate email. (The original copy could be sent for processing purposes).
EOI Processes for Outbound and Inbound EOI Requests
- Outbound Process
If the tax officer requires information allegedly located in the Partner Country or Partner Jurisdiction, the tax officer could make EOIR to the treaty partner through the Director of International Taxation as the Competent Authority (CA) in Indonesia.
The process for sending an outbound EOI request to a treaty partner are:
- the local tax office completes an EOI template to initiate the request and sends it to the Director of International Taxation.
- the request is assigned to an EOI analyst, who will ensure:
- a relevant tax treaty is in place to cover the requested information;
- there is foreseeable relevance between the information requested and the audit activity being undertaken;
- all domestic information-gathering options have been exhausted.
- After all the above criteria are met, the EOI analyst will translate the initiate request from the local tax office and send it to the treaty partner.
- The other jurisdiction’s Competent Authority responds to the Indonesia’s Competent Authority request. The respond is reviewed and translated before being sent to the local tax office.
- Inbound Process
In addition to conducting Outbound EOIR, Indonesia also receives EOIR from Partner Countries or Partner Jurisdictions (Inbound EOIR). The process for receiving an inbound EOI request from a treaty partner are:
- Indonesia’s Competent Authority receives incoming EOI requests from other jurisdictions to the Director of International of Taxation.
- The request is assigned to an EOI analyst who reviews and ensures all international criteria are met.
- When the international criteria are not met, the Director of International Taxation will send a clarification to the treaty partner.
- After all criteria are met, the EOI analyst may
- gather information from internal databases;
- issue formal notices to financial institutions to request banking information;
- liaise with compliance officers to obtain documentation from third parties and/or the taxpayer.
- The EOI analyst prepares a response and, following approval from the Director of International Taxation, sends it to the treaty partner.
IBK
Request for IBK
Government Regulation in Lieu of Law Number 1 of 2017 (Perpu 1 of 2017) concerning Access to Financial Information for Tax Purposes which has been stipulated as law through Law Number 9 of 2017 concerning Stipulation of Government Regulation in Lieu of Law Number 1 of 2017 Regarding Access to Financial Information for Tax Purposes Becoming Law, opening up broad access for the Directorate General of Taxes (DGT) as the tax authority in Indonesia to receive and obtain financial information for tax purposes.
Access to financial information is very necessary for the DGT in its efforts to achieve tax revenue targets as the main source of state revenue to fund national development programs, which aim to improve the welfare and well-being of all Indonesian people equally and fairly. Apart from that, access to financial information is also a form of fulfilling Indonesia's commitment to participate in implementing the exchange of financial information based on international agreements in the field of taxation.
Perpu 1 of 2017 gives the DGT the authority to obtain access to financial information for tax purposes from:
- Financial Services Institutions (LJKs) which carry out activities in banking, capital market, and insurance sectors;
- Other Financial Services Institutions (Other LJKs); and/or
- Other Entities categorized as financial institutions in accordance with financial information exchange standards based on international agreements in the field of taxation.
In implementing the provisions in Perpu 1 of 2017, confidentiality obligations based on the provisions of other laws and regulations that bind LJKs, other LJKs and/or Other Entities become unenforceable.
LJKs, Other LJKs, and/or Other Entities are required to submit periodic reports on financial information managed for a period of one calendar year to the DGT, and are required to provide Information, Evidence, and/or Explanation (IBK) if requested by the DGT, in the context of implementing the provisions of laws and regulations in the field of taxation and implementing international agreements in the field of taxation.
Furthermore, technical instructions for implementing IBK are regulated in Minister of Finance Regulation Number 70/PMK.03/2017 concerning Technical Instructions Regarding Access to Financial Information for Tax Purposes, where the DGT has the authority to obtain access to financial information for tax purposes from LJKs, Other LJKs, and/or Other Entities, whether head office, branch office, or unit that manages the requested IBK.
The DGT has the authority to request IBK from LJKs, other LJKs and/or Other Entities by submitting an IBK request letter that at least contains:
- details of the requested IBK;
- format and procedur of granting the requested IBK; and
- reason for requesting IBK.
Furthermore, the LJKs, Other LJKs, and/or Other Entities that receive the IBK request letter are required to provide the requested IBK no later than 1 (one) month from the date of the receipt of the IBK request letter.
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