Indonesia General Information

The name Indonesia was derived from “indos nesos”, meaning islands near India, The country is in fact the largest archipelago in the world with a thousand islands, 17,508 to be precise, spread in an area between the Asian continent and Australia, and between the Pacific and the Indian oceans. The islands are inhabited by many tribes with diverse culture and languages, although there is a national language spoken throughout the country, namely Bahasa Indonesia. It is thus appropriate, that the country’s motto is Bhinneka Tunggal Ika, which means: Unity in Diversity.

Our state philosophy is Pancasila, or the Five Principles. This year is the country’s fiftieth anniversary of independence.

There are 23 Provinces and 3 Special Territories (usually we say 26 Provinces) in Indonesia.

Source: The Jakarta Post

Climate and Weather information
The climate and weather of Indonesia is characterized by two tropical seasons, which vary with the equatorial air circulation and the meridian air circulation.
The dry season (June to September) is influences by the Australian continental air masses; while the rainy season (December to March) is the result of the Asian and Pacific Ocean air masses.
Volcanoes
The country is predominantly mountainous with some 400 volcanoes of which 100 are active. Mountains higher than 9,000 feet are found on the islands of Sumatra, Java, Sulawesi, Bali, Lombok and Sumbawa. The highest mountain is the perpetually snow-capped Mandala Top (15,300 feet) in the Jaya Wijaya mountain range of Irian Jaya.
Rivers and Lakes
Many rivers flow throughout the country. They serve as useful transportation routes on certain islands, for example the Musi, Batanghari, Indagiri and Kamper rivers in Sumatra; the Kapuas, Barito, Mahakam and Rejang rivers in Kalimantan; and the Memberano and Digul rivers in Irian Jaya. On Java rivers are important for irrigation purposes, i.e. the Bengawan Solo, Citarum and Brantas rivers.
A number of islands are dotted with scenic lakes, like the Toba, Maninjau and Singkawang lakes on Sumatra; the Tempe, Tawuti, Sidenreng, Poso, Limboto, Tondano, and Matana lakes on Sulawesi; the Paniai and Sentani lakes on Irian Jaya.Fauna
Indonesia contains one of the world’s most remarkable geographical boundaries in its distribution of animals. This dates back to the glacial period when sea level fell all over the world. During this period the islands of Java, Sumatra, Kalimantan and Bali on the Sunda Shelf were joined together with one another and the Asian mainland, but Irian Jaya, Aru and the Australian continent of the Sahul Shelf were separated. This early geographical separation explains why the tropical animal species of Java, Sumatra and Kalimantan do not exist in Irian Jaya. For the same reason, the kangoroo of Irian Jaya is missing in the other region.
Maluku, Sulawesi, and the Lesser Sunda Islands, which lie between the Sunda and Sahul shelves, have a strikingly different fauna. Most of the eastern fauna do not exist in Sulawesi even though this island is close to Kalimantan, being just across the Makassar Strait. One possible reason for this is that Kalimantan and Sulawesi might have been separated by a deep straight at one point, while the great depth of the Banda Sea kept them apart during the glacial period. Some scientists have attributed the phenomenon to three faunial lines. ALFRED RUSSEL WALLACE (1823-1913) wrote in his book, “The Malay Archipelago”, that Nusantara was separated into the Oriental ecological area and the Australian ecological area by a Wallace L line that runs from the South to North, passing the Lombok and Makassar Straits and ending in the south eastern part of The Philippines.

Typical Indonesian Fauna

Flora
The rich flora of Indonesia includes many unique varieties of tropical plant life in various forms. Rafflesia Arnoldi, which is only found in certain parts of Sumatra, is the largest flower in the world. The parasitic plant grows on certain lianas but does not produce leaves.
The myriad of orchids in rich in species, varying in size from the largest of all orchids, the tiger orchid of Grammatophyllum Speciosum, to the tiny and leafless species of Taeniophyllum which is edible and taken by the local people as a medicine and is also used in handicrafts.
On June 5, 1990, in a ceremony to mark the World Environment Day, President Soeharto declared three flowers as Indonesia’s national flowers: the melati (small white sweet smelling flower), the angrek bulan (moon orhid) and the Raflesia Arnoldi, named after Sir Thomas Stamford Raffles and Dr. Arnold.
About 6,000 species of plants are known to be used directly or indirectly by the people. A striking example in this modern time is the use of plants in the production of traditional herbal medicine or “Jamu”. Flowers are indispensable in ceremonial, customary and traditional rites.
Indonesia Standard Times
As of January 1, 1988, Indonesia’s three time zones have been changed :
Western Indonesia Standard Time equals GMT plus 7 hours (meridian 105 East), covering all provinces in Sumatra and Java, and the provinces of West and Central Kalimantan.
Central Indonesia Standard Time equals GMT plus 8 hours (meridian 120 East), covering the provinces of East and South Kalimantan, all provinces in Sulawesi, and the provinces of Bali, West and East Nusa Tenggara and East Timor.
Eastern Indonesia Standard Time equals GMT plus 9 hours (meridian 135 East), covering the provinces of Maluku and Irian Jaya.
1.

Indonesia’s Tax Laws

Indonesia’s latest tax law revision went into effect as of January 1, 1995. Following is an overview of the regulations as they stand at the present time.
GENERAL PROVISIONS

Effective date
The current tax law is applicable for withholding and other taxes from January 1, 1995 and for income taxes for tax years ending after June 30, 1995.

Statute of limitations
The period for a tax return to be deemed final, in the absence of any criminal conviction in relation to taxes, is ten years from the time the tax was due. This period may be extended if a warning letter and distress warrant have been issued, the tax due has been acknowledged by the taxpayer, or an assessment letter has been issued under Article 13, paragraph 5 of the Law.

Payment responsibility
Tax returns must be signed by a company manager or director and those whose ordinary responsibility is for tax payments. The law includes anyone who participates in corporate policy making as being responsible for tax payments.

Penalties
The monetary penalty for late filing of tax returns is Rp 25,000 (US$10.80) per return for monthly returns and Rp 50,000 (US$21.60) for annual returns. However, there are additional penalties for those who intentionally do not maintain proper books and records. These include up to six years in prison and fines of up to four times the taxes due.
There is also a provision for a two year prison term and a fine of up to four times the amount of refund or compensation requested for those who are guilty of attempting to misuse a tax number or who request a refund or tax compensation in access of what is actually due.

Third party obligations
Third parties are compelled to comply with requests from Tax Auditors for access to information, files, records, etc. If they fail to cooperate, or provide false information, they can be subject to criminal sanctions of one year in jail and a fine of up to Rp 5 million (US$2,175). Anyone who directly or indirectly hampers or complicates a tax investigation is also liable to imprisonment for up to three years, and a maximum fine of Rp 10 million (US$4,350).

Correction of returns
Taxpayers are free to correct their tax returns for up to two years from the end of the year in which the tax was due, with interest accruing at 2 percent per month for a maximum of 24 months. This is providing there has been no full tax audit.
After the two year limit has been reached, taxpayers are only able to submit changes which reflect an increase in payable taxes, a decrease in tax losses, or an increase in assets or capital. An administrative fine of 50 percent of the underpaid taxes must be settled before the amended return is filed.

Interest on refunds
The Tax Office is responsible for paying interest of 2 percent per month on overdue tax refunds, commencing the month after the date of a decision letter. There is also a provision for payment of 2 percent interest per month on any objections upheld by the Tax Office or Council, for a maximum of 24 months.

Annual tax return due date
The due date for payment of outstanding taxes is the 25th day of the third month following the close of the book year.

Capital gains for foreigners
Capital gains from the sale of Indonesian assets held by foreigners are taxable at 20 percent on the estimated net income. There are, however, no regulations pertaining to the definition of estimated net income.

Monthly installments
The monthly installments need to be calculated taking into account assessments issued by the Tax Office, last year’s tax return, taxes already withheld and installments over the previous year. New taxpayers have to make monthly installments calculated as 10 percent of the annualized net income, divided by twelve.
INCOME TAX

Rates
The assessed rate for both individual and corporate taxpayers is:

* Rp 0 to Rp 25 million (US$10,870) = 10 percent
* Rp 25 million to Rp 50 million (US$21,740) = 15 percent.
* Rp 50 million and above = 30 percent

Permanent establishments

* Rendering of the services in Indonesia is not considered a “permanent establishment” if the period of service does not exceed more than 60 days in any one 12 month period.
* All income of a similar kind derived from Indonesia will be subject to tax in Indonesia.
* The branch profit tax is not payable if the net income after tax is invested in founders capital of an Indonesian company under the condition that it is invested in the year or the following year in which the income is earned and is not divested within two years after commencement of the commercial production of the Indonesian company.

Note: Non-current assets can be revalued but the revaluation will form part of the taxable income. Tax deductions are allowed for depreciation calculated on the revalued amounts.

Government Regulation No. 45/1996
(Tax Holiday Law)

Article 1

1. The income tax on income of resident corporate taxpayers which is received or earned by newly founded companies can be borne by the government for certain industries and for a maximum period of ten years.

2. The period as meant in paragraph (1) shall start from the completion of project construction by relevant companies, not later than five years after obtaining the capital investment approval letter of the business license from the authorized agency.

3. In the case of companies as meant in paragraph (1) finishing their project construction within less than five years, the time saved shall constitute an addition to the period stipulated in paragraph (1).

4. For certain industries set up outside Java and Bali, the period as meant in paragraph (1) or plus the addition obtained pursuant to paragraph (3) can be extended by a maximum of two years.

5. The income tax on the payment abroad of dividends of the corporate taxpayers as meant in paragraph (1) can be borne by the government for the period as stipulated in this article.

Article 2

1. The certain industries meant in Article 1 shall be determined by the President on the basis of the proposal of the Team for the Study of Tax Facilities for Certain Industries.

2. The membership and task of the Team as meant in paragraph (1) shall be stipulated by presidential decree.

Article 3

Further provisions required for the implementations of this government regulation shall be stipulated by the Minister of Finance.