International Update

Image Source: https://www.freepik.com/free-vector/hand-drawn-credit-assessment-concept_20289181.htm#fromView=search&page=1&position=36&uuid=8ba850a8-ee57-4c96-93e0-b3c7ffaa7a49   From: A.M Oktarina Counsellors at Law Contributors: Ethania Surinitulo Duha, S.H., Pramudya Yudhatama, S.H., C.L.A. Reviewer: Noverizky Tri Putra Pasaribu, S.H., L.L.M (Adv).   Background A business activity must be inseparable from the transaction, both with parties who have a special relationship and with parties who do not have a special relationship. Often entrepreneurs look for loopholes to be able to manipulate prices far from reasonable limits. Due to the prevalence of these events, the Directorate General of Taxes of Indonesia issued regulations as a preventive measure to reduce or even eliminate these acts of price manipulation. Entrepreneurs in their capacity as taxpayers also have an obligation to comply with existing tax regulations. One way to counter such price manipulation is to establish the Arm’s Length Principle (“ALP“). Basically, ALP applies when there is a transaction that is affected by a special relationship. However, what is this special relationship meant by? And what kind of transactions require ALP?   Legal Basis Government Regulation Number 55 of 2022 concerning Adjustment of Arrangements in the Field of Income Tax; (“PP No.55/2022“) Regulation of the Ministry of Finance of the Republic of Indonesia Directorate General of Taxes Regulation of the Director General of Taxes No. Per-32/PJ/2011 concerning Amendments to the Regulation of the Director General of Taxes No. Per-42/PJ/2010 concerning the Application of the Principles of Fairness and Business Practices in Transactions between Taxpayers and Parties with Special Relationships; (“PMK No. Per-32/PJ/2011“) Regulation of the Minister of Finance of the Republic of Indonesia Number 172 of 2023 concerning the Application of the Principles of Fairness and Business Practices in Transactions Influenced by Special Relationships; (“PMK No.172/2023“)   ALP is a principle that regulates that if the conditions in the transaction carried out between the parties who have a special relationship are equal to or comparable to the conditions in the transaction carried out between the parties who do not have a special relationship, the price or profit in the transaction carried out between the parties who have a special relationship must be within the price or profit range in the transaction carried out between the parties who do not have a special relationship as a comparison as explained in Article 1 number 5 of PMK No. Per-32/PJ/2011 that:   Article 1 number 5 of PMK No. Per-32/PJ/2011:   “The Arm’s length principle (ALP) is a principle that regulates that if the conditions in the transaction conducted between the parties who have a Special Relationship are the same or comparable to the conditions in the transaction carried out between the parties who do not have a Special Relationship that is comparable, then the price or profit in the transaction made between the parties who have a Special Relationship must be equal to or within the the price range or profit in transactions made between parties who do not have a Special Relationship that is a comparator.”   What kind of special relationship then that the parties have? A special relationship means that the parties are in a state of dependence or have attachments caused by ownership or participation of capital, control, or blood or family relationships that result in one party being able to control the other party or resulting in the other party not standing independently in carrying out business activities as explained in Article 33 paragraph (1) of Government Regulation No.55/2022 and Article 2 paragraph (2) of PMK No.172/2023 that:   Article 33 paragraph (1) of Government Regulation No.55/2022: “A special relationship as referred to in Article 32 paragraph (3) is a state of dependence or attachment of one party to another caused by: ownership or participation of capital; mastery; or blood or blood family relations, which results in one party being able to control the other or not standing independently in running a business or carrying out activities.”   Article 2 paragraph (2) PMK No.172/2023:   “A special relationship as referred to in paragraph (1) is a state of dependence or attachment of one party to another caused by: ownership or participation of capital; mastery; or claret or blood family relationship.”   Then what kind of transaction requires ALP? Transactions that require ALP are transactions that are affected by a special relationship as explained in Article 4 paragraph (6) of PMK No.172/2023 that:   Article 4 paragraph (6) PMK No.172/2023:   “Transactions Affected by Certain Special Relationships as referred to in paragraph (5) include: service transactions; transactions related to the use or right to use intangible property; financial transactions related to loans; other financial transactions; property transfer transactions; business restructuring; and cost contribution agreement.“   The purpose of the ALP is to determine a reasonable transfer price when there is a transaction that is affected by the existence of a special relationship and its application is carried out by comparing the conditions and indicators of transaction prices affected by the special relationship with the conditions and price indicators of the same or comparable independent transaction as explained in Article 3 paragraph (2) and paragraph (3) of PMK No.172/2023 that:   Article 3 paragraph (2) PMK No.172/2023:   “The principles of Fairness and Business Practices as referred to in paragraph (1) are applied to determine a reasonable Transfer Price.”   Article 3 paragraph (3) PMK No.172/2023:   “The principle of Fairness and Business Practices as referred to in paragraph (2) is applied by comparing the conditions and price indicators of Transactions Affected by Special Relationships with the conditions and price indicators of the same or comparable Independent Transactions.”   Therefore, it is necessary to know the stages of implementing ALP before making transactions that are affected by special relationships as explained in Article 4 paragraph (1) and paragraph (4) of PMK No.172/2023 that:   Article 4 paragraph (1) PMK No.172/2023:   “The application of the Principles of Fairness and Business Practices as referred to in Article 3 paragraph (3) must be carried out: based on the actual circumstances; at the time of the Transfer Pricing and/or at

A.M | Oktarina Counselor at Law is one of the law firms participating in the International Conference “The Future of ADR In Asia- The Collaborative Approach” at Sunway Hotel, Phnom Penh Cambodia   International Conference “The Future of ADR In Asia- The Collaborative Approach” organized by the Collaboration between Indonesia Dispute Board (IDB) and Cambodian Centre for Mediation (CCM) on 15th May, 2024 at Sunway Hotel, Phnom Penh, Cambodia, attended by dispute resolution experts, Indonesian Supreme Court Judges, Lawyers, Businessmen, and Academics from ASEAN countries,  including Cambodia, Indonesia, Singapore, Vietnam, and Australia.  One of them who participated was Poppy Putri Hidayani, S.H., LL.M., CPM, Mediator who is also an Internship Associates at A.M | Oktarina Counselor at Law. The purpose of this international conference is to give a message to professional practitioners of dispute resolution outside the court to better understand the process as well. At the same time through this conference, the organizers want to convey a message to practitioners of out-of-court dispute resolution that in the current era, out-of-court disputes are not for resolving it’s not just for family disputes even the international community has now reached a stage where they can use out-of-court dispute resolution mechanisms to resolve international trade disputes or also cross-border disputs. President of the Indonesian Dispute Council (DSI) Prof. Sabela Gayo, S.H., M.H., Ph.D., said, “The Indonesian Dispute Council today has implemented a historic agenda of holding an International Conference on Alternative Dispute Resolution in Asia in the future with the theme Collaborative Approach,” The event is certainly not only a form of cooperation between the Indonesian Dispute Council (DSI) and the Cambodian Mediation Center (CCM), but there will also be more opportunities for Mediators from both countries to exchange knowledge and experience in carrying out their profession as Professional Mediators.   For more information, please contact: partner@amoktarina.net pasaribu@amoktarina.net 0817779122  

By AMO Lawyer in conjunction with the Indonesia Directorate General of Oil and Gas Procedures for Obtaining Temporary Business License 1.   Business Entity should submit an application for Business License to the Minister of Energy and Mineral Resources through the Director General of Oil and Gas by enclosing the documents specified in the administrative and technical requirements. The application will be further processed upon completion and fulfillment of the specified administrative and technical requirements. All application documents will be returned if the administrative and technical requirements are not completed. The Business Entity may resubmit application upon completion of all required documents. 2.   The completed administrative and technical documents submitted by the Business Entity will be assessed and evaluated by the Directorate General of Oil and Gas. 3.   For clarification of administrative and technical data and company’s performance, the Business Entity should conduct a presentation. 4.   Site visit will be conducted to ensure the conformity of the administrative data with the information of the Business Entity’s plan. 5.   The Directorate General of Oil and Gas will examine and evaluate the administrative and technical data for approval/refusal of the Temporary Business License. 6.   The Director General of Oil and Gas on behalf of the Minister of Energy and Mineral Resources will issue the Temporary Business License with effective period of maximally 3 (three) years with regard to the approved application for Business License. Procedures for Obtaining Business License 1.   Business Entity shall complete the documents specified in the requirements for issuance of Business License. 2.   Business Entity shall submit an application for Business License. 3.   The Directorate General of Oil and Gas will examine and evaluate the administrative and technical data for approval/refusal of Business License. 4.   The Director General of Oil and Gas on behalf of the Minister of Energy and Mineral Resources will issue the Business License with effective period of maximally 20 (twenty) years with regard to the approved application for Business License. Service Standard In order to provide excellent service to Business Entities, the service process will be completed within 10 working days upon fulfillment of all requirements and accurate completion of all required documents.   TRANSPORTATION BUSINESS LICENSE Transportation Business License for Gas Fuel (CNG), LNG and LPG A.   TEMPORARY BUSINESS LICENSE 1.   Administrative Requirements: a.   The Company’s Deed of Incorporation and its amendment that have been approved by the competent authority. b.   Company Profile. c.   Company Tax Registration Number (NPWP). d.   Certificate of Company Registration (TDP). e.   Certificate of Business Domicile. f.   A written declaration with sufficient stamp duty regarding the company’s commitment to operational safety, occupational health, environmental management and local people development. g.   A written declaration with sufficient stamp duty regarding the company’s commitment to complying with the prevailing laws and regulations. h.   Principle Approval from the Local Government with regard to location for the construction of facilities and infrastructure. i.   A written declaration with sufficient stamp duty regarding the company’s willingness to accept the site visit made by the staff of the Directorate General of Oil and Gas. 2.   Technical Requirements: a.   Preliminary Feasibility Study. b.   Funding guarantee arrangement or any other funding guarantee; c.   Waste Management Plan; d.   Environmental Study Plan; e.   Plan regarding type, quantity, capacity and operating area of transportation facility including the technology to be used. f.   Plan regarding product, standard and quality of product to be transported. g.   Relevant Agency’s Recommendation. Land Ministry of Transportation ●    Motor Vehicle Inspection (KIR) Book/Periodic Inspection Book ●    Copy of Vehicle’s Identification Number (STNK) Directorate of Metrology, Directorate General of Domestic Trade ●    Certificate of Measuring Device Calibration Sea Directorate General of Sea Transportation, Ministry of Transportation ●    SIUPAL (Sea Shipping Business License) ●    Vessel Registration Card ●    Hull Classification Certificate ●    International Oil Pollution Prevention Certificate ●    Certificate of Seaworthiness ●    Nautical Certificate of Registry/Ship Flag Certificate of Registry ●    ISM Code (Document of Compliance and Safety Management Certificate) ●    Route Plan (RPT) ●    Certificate of Equipment ●    Certificate of Machinery ●    Certificate of Fitness for LPG/LNG Directorate of Metrology, Directorate General of Domestic Trade ●    Certificate of Measuring Device Calibration 3.   Obligations of the business entity: a.   Within 2 years upon issuance of the Temporary Transportation Business License, the Business Entity shall execute: ●    Head of Financial Agreement ●    Facility Procurement Agreement Extension may be granted for maximally 1 (one) year. The Temporary Business License shall lawfully expire if within the specified period the Business Entity fails to fully perform the aforesaid obligations. b.   Submit report in writing to the Minister of Energy and Mineral Resources through the Director General of Oil and Gas regarding the progress in the performance of the obligations as referred to in letter a once every 1 (one) month. c.   Complete the procurement of the Transportation facilities and infrastructure within 3 (three) years and such period may be extended for maximally 2 (two) years if the facility procurement process has reached 60% completion. The principle approval shall lawfully terminate if within the specified period the Business Entity fails to complete the procurement of the required Transportation facility and infrastructure. d.   Submit a report to the Minister of Energy and Mineral Resources through the Director General of Oil and Gas regarding the progress in the procurement of the Transportation facility and infrastructure as referred to in letter c above once every 1 (one) month. e.   Submit an application for Transportation business license to the Minister of Energy and Mineral Resources through the Director General of Oil and Gas upon completion of all obligations under the Temporary Business License. 4.   Sanctions Notwithstanding the provision of Article 1266 of the Indonesian Civil Code, the Temporary Transportation Business License for Gas Fuel (CNG), LNG and LPG may be revoked and rendered null and void if: a.   the Business Entity violates any of the prevailing statutory regulations. b.   the Business Entity fails to fulfill its obligations and the provisions set out in the Temporary Transportation Business License for Gas Fuel (BBG/CNG), LNG, LPG. B.   BUSINESS LICENSE 1.   Administrative Requirements:

[vc_row][vc_column][vc_column_text]By: AMO Lawyers Contributors: Noverizky Tri Putra Pasaribu S.H LL.M (Adv)[/vc_column_text][vc_tta_tabs][vc_tta_section title=”English” tab_id=”1539672689117-39c88d08-c03e”][vc_column_text]In international business transaction, it is very common for entrepreneur to conduct the financing or loan transaction. This transaction generally is to support the entrepreneur business activity for certain sector such the construction development, company capital injection, contractor settlement payment, to secure the process of the facilities and infrastructure construction and etc. Accordingly, before the Bank may proceed with its approval for the entrepreneur financing or loan transaction, the Bank commonly proceed with its full compliance investigation covering Legal Due Diligence and Financial Due Diligence, where each of the corporate sector, license, government approval, capital current condition, debt and other loan, third party agreement, financial recapitulation, financial report and other elements shall be check very thoroughly. Specifically for the mining company, there is one specific factor that currently becomes a high level of concern or threat for the Bank related with its approval for the financing or loan transaction, respectively for the government approval to the mining company to proceed with its activity for the financing or loan transaction with the Bank. As you may aware, every entrepreneur who wishes to conduct its business in the mining sector shall require complying with the Law No 4 of 2009 concerning mineral and coal mining (“Mining Law”). At the beginning, the holder of IUP (Mining License) and IUPK (Special Mining License) shall have the obligation to conduct a report for its mining activity which regulated under Article 111 of the Mining Law, as follow “Mining Permit holders and Special Mining Permit holders must submit reports in writing periodically on activity plans and implementation of mineral and coal mining business activities to the Minister, governors, or regents/mayors within their authority”. The detail of this written report shall be governed under Government Regulation. One of the detail reference that being use for mining activity report is regulated under the Article of 101 to 105 of the Government Regulation No 23 of 2010 concerning the Implementation of the Mineral and Coal Mining Activity (“PP No 23/2010”) covering the written report for the Work and Budget Plan (Rencana Kerja dan Anggaran Biaya/”RKAB”) where Work and Budget plan shall include change of capital activity for the financing or loan transaction governed under the Ministry Regulation of Energy and Mineral Resources of Republic of Indonesia No 27 of 2013 concerning the Procedure and Determination of the Stock Divestment Price, and the Change of Capital Investment in the Mineral and Mining Coal Sector (“Permen No 27/2013”)    Under Article 15 Permen No 27/2013 stipulated that “the Change of Capital Investment only can be conducted after obtained the approval from the Ministry, Governor or Head of Region/Mayor as in accordance with its authority” and the Change of the Capital Investment shall include the following: the change of investment and financing resources; the change of the company status from Foreign Direct Investment Company (FDI) to the National Investment Company (PMDN) and vice versa; the amendment of Article of Associations; the change of the Director and Board of Commissioner; and the change of Shareholders ownership. For more detail, the regulation provided in the Article 16 of the Permen No 27/2013 stipulated that the request for the change of investment financial resources as provided before shall be conducted with the following required documents, as follow: a. Ground / reason for the change of investment and financial resources; b. Evidence of settlement for the Dead-rent for the IUP Exploration Holder, IUPK Exploration Holder, IUP Operation Production Holder, IUPK Operation Production Holder; c. Evidence of settlement for production dues consecutively for the period of the last 2 (two) years for the IUP Operation Production Holder and IUPK Operation Production Holder; d. Evidence of settlement for production dues for the IUP Exploration Holder and IUPK Exploration Holder that owned the temporary license to conducted the transporting and selling activity. And IUP Operation Production Holder specifically for processing and or refinement that harness the connatural mineral; e. Audited financial report for the last 2 (two) years by the Public Accountant; f. The Facility or Loan Agreement or Financing and credit Agreement; g. The Copy of IUP Exploration Certificate or IUPK Exploration Certificate or IUP Operation Production Certificate or IUPK Operation Production Certificate owned by the mining company registered at the General Directorate of Mining and Mineral Resources and has been declared clean and clear. Furthermore the issue is, that the legal infringement of this provision is not regulated under the Article 30 of Permen No 27/2013 concerning administration sanction. Although such sanction does not stipulated under the Permen No 27/2013, the obligation to obtain the approval from the Ministry, Governor or Head of Region/Mayor as in accordance with its authority for the change of the capital investment and financial resources shall keep binding the mining company. In practice, this issue has become a very imperative concern from the Bank, considering that to conduct the financing or loan transaction, every mining company must in the full compliance position (comply to all obligation under the prevailing law and regulation) except for other obligation that has yet to arise based on the prevailing law and regulation. Further in practice, the Bank shall request to the mining company to provide a security or guarantee in order for the Bank to have the legal immunity to proceed with its approval for the financing or loan transaction as regulated under the prevailing Indonesian Law. To understand its broader context, the mining company generally shall provide the following documents of security in the form of: Corporate guarantee and certificate; Director guarantee and certificate; Commissioner guarantee and certificate; Comfort Letter; etc.   The following security documents as abovementioned shall become the basis or ground of legal immunity for the Bank to provide the financing or loan transaction to the mining company as regulated under the prevailing law and regulation in Indonesia. Therefore, the security for such compliance can be conducted by the mining company and shall not be waived without exception as agreed

A.M | Oktarina Counselor At Law (“the Firm”) has the most potential and professional people working together and merging into one embodied system. One of the Firm Corporate Strategy is to engage with other potential firm and legal entity around the world: Shiftinpartners: http://www.shiftinpartners.com/ We are engaging with the Shiftin and partners to provide a comprehensive service to all of our client. This, including merge with the Firm international portfolio and the International standard which exist in the United Emirat Arab (EUA) and all around the globe where the Shiftin and partners operated. The Shiftin and Partners is one of the most well known and respective commercial and consulting firm in the World. Their main core operation shall be dealing with several market and commercial practice from: 1. Strategy Development 2. Strategy Translation 3. Risk Management 4. Initiative Management 5. Cascading and Alignment 6. Human Capital Alignment 7. Strategy Communication 8. Operational Innovation 9. Reporting Decision Making For more detail please open the above website or contact our lawyer at info@amoktarina.co and n.pasaribu@amoktarin.co  please refer to our contact section as provided under this website. #Incoming Search: Advokat Jakarta, Corporate Lawyer Jakarta, Legal Consultant Jakarta