| Summary: | The fourth amendment to the Indonesian Income Tax Act (UU PPh) has inserted three
new provisions encountering three newly-identified tax avoidance schemes. However, the
previous regulations in respect of thin capitalization, CFC and interest stripping were not
carefully be given attention and be made in conformity with their newest developments. As an
illustration, the term �company� has never been defined in the Act. Instead, the Act introduces
the same term in the conduit company rules. Another example involves the CFC rule which
does not put additional provisions to define �control�. Another interesting development is the
regulation of the International-hiring out of labor which instead of making it in conformity
with the OECD MC, the rule empowers the country to increase the taxable income of an employee
in respect of employment excercised abroad. This article attempts to demonstrate how
the Indonesian anti-avoidance rules work out and prove how taxpayers may well, ironically,
abuse those rules.
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