On 1 April 2019, the Minister of Finance (MoF) of Indonesia Published Regulation No. 35 / PMK.03 / 2019, on what constitutes a permanent establishment (PE).The main measures contain that are:

According to the Regulation (PMK-35), the following activities are considered a PE in Indonesia:

  • Construction, installation, or assembly projects.
  • Services provided by employees or other individuals that are carried out more than 60 days in a 12-month period.
  • Dependent agent (i.e., individual or entity who receives instructions for the benefit of a foreign person or do not bear the risk of the transaction).
  • Agents or employees of insurance companies that are not established and not domiciled in Indonesia, who receive insurance premiums or bear risks in Indonesia.

Non- resident individuals and entities who run a business or carry out activities through a business must obtain a Tax Registration Number.

If a double tax treaty with Indonesia applies, preparatory or auxiliary activities are not considered a PE. Preparatory activities are preliminary, and allow essential and significant activities to be carried out. Auxiliary activities are additional activities, which facilitate essential and significant activities. Essential and significant activities include the following:

  • Core business or activities of a foreign person or agency.
  • Inseparable part of the core business or activity of a foreign person or agency.
  • Directly generate income for foreign persons or entities.
  • Use significant assets or human resources.

The regulations of PMK-35/2019 were effective from 1 April 2019.