Need for Domestic Rules on Offshore Indirect Asset Transfers

The World Bank’s 2018 report defines offshore indirect transfer of asset (OIT) as the cross‑border sale of an entity’s shares. Although legal ownership remains unchanged, the transaction materially shifts control of the underlying assets. OIT is often used to avoid tax on the gain from the asset transfer.

The OECD’s Multilateral Convention to Implement Tax Treaty‑Related Measures (MLI) strengthens Article 13(4), allowing source countries to tax gains from shares whose at least 50 % value derives from immovable property abroad. In Indonesia, existing rules such as KMK 434/1999‑s.d.d. and PMK 81/2024 only address withholding tax on foreign shareholders and do not cover all OIT structures.

Without comprehensive legislation, Indonesia cannot fully capture tax revenue from OIT transactions. Introducing a domestic framework based on the OECD model would protect Indonesia’s tax base, boost receipts, and lessen disputes over share valuation. Read the full source at news.ddtc.co.id (https://news.ddtc.co.id/komunitas/lomba/1814493/urgensi-menyusun-aturan-domestik-offshore-indirect-transfer-of-asset).