Profits of a Controlled Foreign Companies (CFCs) are subject to deemed dividend rules in Indonesia. A CFC is a foreign entity that is at least 50% owned by an Indonesian taxpayer or at least 50% collectively owned by Indonesian taxpayers. The scope of CFC income also covers income from indirectly owned CFC with a minimum of 50% ownership by another CFC, or collective ownership by an Indonesian taxpayer’s CFCs, or collective ownership by a number of CFCs (including under the same or different Indonesian taxpayers).

The ownership threshold that is used to determine the CFC status is the ownership percentage at the end of the Indonesian taxpayer’s fiscal year, which is based on either the percentage of paid-up capital or the percentage paid-up capital with voting rights. The only situation in which the rules do not apply is when the CFC’s shares are listed on a stock exchange.