Amendment to Minister of Finance Regulation No. 47 of 2024: Strengthening Compliance and Preventing Tax Avoidance

Tax Consultant Office Bali, Agam Anand Konsultama

On August 6, 2024, the government, through the Ministry of Finance, enacted Minister of Finance Regulation (PMK) No. 47 of 2024. This regulation marks the third amendment to PMK No. 70/PMK.03/2017 concerning Technical Guidelines on Access to Financial Information for Tax Purposes. The amendment aims to strengthen the compliance of financial institutions and prevent tax avoidance in accordance with international common reporting standards.

Background of the Amendment

This regulation was issued to provide legal certainty for financial institutions and other entities in reporting financial information required for tax purposes. Additionally, this amendment seeks to accommodate anti-avoidance provisions that were previously not specifically addressed in existing PMK.

Key Points of the Amendment

Addition of Article 10A: Financial institutions are now prohibited from facilitating the opening of new accounts or conducting new transactions for individuals or entities that refuse to comply with the identification procedures outlined in Article 9. This prohibition includes various types of transactions such as deposits, withdrawals, and transfers, except for transactions that have been previously agreed upon.
Removal of Several Articles: To align the regulation with the new provisions, several articles such as Articles 13, 14, and 24A, among others, have been removed. This was done to ensure that the regulation focuses on more relevant and specific provisions.
Introduction of Chapter VA on Anti-Avoidance: This new chapter stipulates that any person, including financial institutions and other entities, is prohibited from engaging in agreements or practices aimed at avoiding tax obligations. The Directorate General of Taxes (DJP) is empowered to determine whether an agreement or practice constitutes tax avoidance and to obtain the necessary information to enforce these provisions.
Strengthening of Warning and Examination Provisions: Amendments to Articles 32 and 33 clarify the procedures related to written warnings and examinations for financial institutions or individuals who fail to fulfill their obligations as stipulated in this regulation. If indications of violations are found, the DJP may conduct an examination and even initiate investigations into suspected tax crimes.

Implications for Financial Institutions and Taxpayers

With the enactment of this regulation, financial institutions are expected to be more cautious and compliant in fulfilling their tax obligations. The strengthening of anti-avoidance provisions also signals the government’s commitment to preventing tax avoidance practices, particularly in the context of international financial information exchange. For taxpayers, it is important to understand that attempts to evade tax obligations through non-compliant means may result in serious penalties.

Conclusion

Minister of Finance Regulation No. 47 of 2024 represents a strategic step by the government to enhance tax compliance and prevent tax avoidance. With this regulation, it is hoped that a more transparent and fair tax system can be established, in line with Indonesia’s commitment to global financial reporting standards.

For further information or if you need consultation regarding this regulation, our team at Agam Anand Konsultama is ready to assist you. Contact us through the available channels on this website.

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