After going through a long process, the legal basis for overseeing transparency of beneficial ownership (BO) in Indonesia is officially valid. Presidential Regulation No. 13 of 2018 concerning the Principle of Recognizing Benefit Owners of Corporations in the Context of Prevention and Eradication of Crimes of Money Laundering and Crime of Terrorism was promulgated on March 5, 2018.
This regulation is to prevent money laundering and tax avoidance from beneficial ownership (BO) or beneficial owners of a corporation. In the Presidential Regulation, it is explained that the owner of a corporate benefit or BO is an individual who can appoint or dismiss the board of directors, the board of commissioners, management, supervisor, or supervisor of the corporation, has the ability to control the corporation, be entitled to and / or receive benefits from the corporation either directly or indirect. The beneficial owners of the corporation that must be reported are those who own shares, voting rights, and profit sharing of more than 25% in the corporation.
The issuance of this Presidential Regulation is the result of collective work of a number of ministries and agencies that have similar efforts in the transparency of BO. This is also supported by Indonesia’s commitment to its membership in a number of global initiatives. As a member of the G-20, Indonesia has agreed on the importance of accurate BO transparency and can be accessed by authorized institutions. Indonesia must also have domestic regulations in accordance with the FATF (Financial Act Task Force) Standards to prevent money laundering practices.
In relation to taxation, the disclosure of BO is part of the principle framework for Anti Revenue and Profit Shifting or known as Base Erosion and Profit Shifting (BEPS). This encouragement of information disclosure occurs almost all over the world, to pursue taxpayers who transfer their tax obligations in tax haven countries. All countries then agreed to oppose the practice of tax evasion and evasion, which is mostly carried out in tax havens. Indonesia has committed to the Automatic Exchange of Information which will begin in September 2018.
In the Extractive Industries sector (oil, gas, minerals and coal), the Extractive Industries Transparency Initiative (EITI) Indonesia seeks to open BO information, with the publication of road maps divided into three stages. The first phase implemented in 2017-2018 is the determination of BO definitions and the existence of studies or studies about BO. From the study it is expected to know about someone / group that meets the requirements as a BO, the most effective way to manage data, and how to collect data about BO. The second phase which is also implemented in 2017-2018 is the development of the institutional framework and transparency law BO. In this phase the Ministry / Institution will be responsible for BO reporting, regulations that support / hinder the implementation of BO, legal framework for BO transparency, and socialization of BO transparency rules on extractive industries. The third phase that will be implemented in 2019 is the implementation of transparency in the extractive sector BO. In this phase steps will be taken to ensure data accuracy and develop systems in BO reporting. In 2020, Indonesia is expected to open data on the name, nationality and domicile of the beneficial owner or BO from extractive industry corporations in the EITI Report.
The issuance of Presidential Regulation No. 13 of 2018 is a step forward for BO data disclosure efforts. The legal basis is the urge for corporations, especially in the extractive industry, to submit BO data that can be accounted for. The next step is to collect data and ensure that the data is accurate in accordance with the provisions in the Presidential Regulation. In addition to ensuring data accuracy, the development of reporting systems and the openness of the BO must also be carried out. In the plan for the completion of the 2016 EITI report to be conducted in 2018, EITI will require reporting companies to list the BO of these companies for the EITI report. With these efforts, it is expected, in 2020 all the steps listed in the Indonesian EITI BO roadmap can be fulfilled. With the openness of the BO data, it can be done to prevent potential loss of state revenue, money laundering practices, covert monopolies, and poor governance.