TAX NEWS - January 2010

Indonesia: Guidance issued on useful life of tangible assets

The Indonesian Directorate General of Taxation (DGT) recently issued implementing guidance (PER-55) for a regulation issued by the Ministry of Finance (MOF) in May 2009. According to the MOF regulation, all types of tangible assets, other than buildings, are listed and classified in a specific group (i.e. group 1, 2, 3 or 4) according to their useful life, with a different depreciation rate applying for each group.

Assets not explicitly listed in one of the groups will by default have the useful life of group 3 (i.e. 16 years) unless the taxpayer submits an application to the DGT to use a different useful life. PER-55 sets out the application procedure to use a different useful life, specifying that the taxpayer submit an application form along with (1) a detailed description of the assets; (2) a specification of the assets from the manufacturer and supporting technical documents issued by the manufacturer showing the useful life of the assets; and (3) the estimated useful life of the assets and economic benefits determined by a public appraiser. The DGT must issue a decision on a request within one month after an application is submitted; otherwise, the application will be deemed to be approved.