Generally, for tax purposes, a company’s books must be maintained in accordance with the prevailing accounting standards unless the tax law stipulates otherwise. By default, the books must be stated in Rupiah, composed in Indonesian, and stored in Indonesia.

Subject to specific DGT approval, foreign-investment Penanaman Modal Asing/PMA) companies, PEs, subsidiaries of foreign companies, taxpayers listed overseas, and taxpayers presenting their financial statements in their functional currency of USD in accordance with the Financial Accounting Standards (Standar Akuntansi Keuangan/SAK) applicable in Indonesia can maintain their books in USD and compose them in English. A collective investment contract (Kontrak Investasi Kolektif/KIK) is allowed to use USD accounting to the extent that it issues USD-denominated investment funds.

An application for DGT approval must be fled with the DGT office no later than three months before the beginning of the USD accounting year. The DGT is required to decide on the application within a month. If no decision is made within that time, the application is automatically approved.

Companies governed by a Production Sharing Contract (PSC) or a Contract of Work (CoW) with the government may decide to apply USD accounting in English simply by notifying the DGT in writing. This notification must be submitted to the DGT office no later than 3 (three) months before the beginning of the USD accounting year.

A company may also compose its books in English but maintain them in Rupiah. In such a case, the company must submit a written notification to the DGT no later than three months after the beginning of the tax year in which the books are composed in English.

The use of a foreign language other than English and a foreign currency other than USD in a company’s books is prohibited. Irrespective of the currency and the language used, companies typically have to settle their tax liabilities in Rupiah (except

for PSC companies) and file tax returns in Indonesian. For corporate income tax, the assertions must be presented in USD side by side with Rupiah in the annual CITR.

A company that has obtained approval to maintain USD accounting may return to Rupiah accounting subject to DGT approval. Once approval is granted, the company may not re- apply for USD accounting approval during the five years after the cancellation of the USD accounting.