06 Sep 2018
You Have To Know These Information Before Doing M & A
Whatever the economic and business conditions, whether in booming or crash situations, M & A can be used as a strategy to up or down the scale of business entities.
In Indonesia, Tax Authority provide the facility to get the approval for M & A using book value, so there is no Income tax and VAT will be imposed.
Here some crucial issues for tax and legal purposes that you need to know before doing M & A using book value.
One of requirement to obtain the approval on M & A using book value is providing the approval for M & A legally.
From Legal point of you, once the M & A is done, the dissolved company automatically is closed by law.
So, you have to make sure that you get the approval from Regional Tax Office using book value, otherwise it will be subject to tax on capital gain. No way to continue the operation of dissolved companies if it is failed to obtain the approval!!
Specifically M & A does not need to get approval from Ministry of Law and Human Rights (MOLHR). But you have to change the Article of Association (Anggaran Dasar) if there are any of some changes as follows:
a. Name and/or domicile of the company;
b. Aim and goal and business activity of the company;
c. Life period of the company;
d. Value of Authorized Capital;
e. Reduction on Issued and Paid In Capital; and/or
f. Status of a closed company to an Open/Public Company or the other way around.
(Based on Art 21 (2) Law no 40 year 2007 regarding Limited Liability Company / UU PT and Government Regulation No.27 year 1998 concerning Merger, Consolidation and Acquisition of Limited Liability Company).
The company will get the Decision of MOLHR (SK) if the one or more above conditions fulfilled, or only need to inform the MOLHR (SP) if it is not fulfilled.
Especially for bank that plan to have M & A, it is a compulsory to obtain the permit from Bank Indonesia Head (article 4 (1) Government Regulation no.28 year 1999 regarding Bank Merger, Consolidation and Acquisition).
Agung Tjahjady SH, CLA, CPA, MM, BKP (Managing Partner)
Registered Tax Consultant, Advocate
+62 816 825 348
BVD Oriana User
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