Tax Update January 2018

In 2015, Ministry of Finance has issued a regulation No. PMK-169/PMK.010/2015 (“PMK-169”) to regulate the debt to equity ratio of 4:1 for the calculation of Income Tax. If the debt to equity ratio exceeds the ratio of 4:1, the interest expense can be deductible limited to the maximum ratio of 4:1.

Recently, the Directorate General of Tax has issued a regulation No. 25/PJ/2017 (“PER-25”) as the implementation for determining the debt to equity ratio for calculating the Income Tax and reporting procedures for foreign private debt.

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