INDONESIA Law and Practice Contributed by: Enny Purnomo Widhya, Nugrahani Astiyanti and I Gusti Ngurah Oka Anantajaya, Mochtar Karuwin Komar
Further, there are, among others, the following require - ments: • the mandatory use of rupiah as the form of cur - rency for any transactions carried out within the territory of the Republic of Indonesia – pursuant to the Currency Law (Law No 7 of 2011, as partially revoked by Law No 1 of 2023 and amended by Law No 4 of 2023) and Regulation of Bank Indo - nesia concerning the Mandatory Use of Rupiah Currency; • to provide banks with the underlying transaction documents for the purchase of any foreign cur - rencies against rupiah through a foreign exchange bank exceeding USD100,000 or its equivalent in other foreign currencies per month per customer – pursuant to the Regulation of Bank Indonesia concerning Transactions in Foreign Exchange Markets; and • to provide banks with underlying transaction docu - ments for any outgoing transfer in foreign currency exceeding an amount of USD100,000 or its equiva - lent in other foreign currencies, or to provide banks with general information for any transfer in foreign currency up to USD10,000 or its equivalent in other foreign currencies – pursuant to the Regulation of Bank Indonesia concerning the Monitoring of For - eign Exchange Flows of Banks and their Custom - ers. There is no consent required for the lessee to perform its obligations under a lease agreement. However, pur - suant to the Law on Foreign Exchange Flow (Law No 24 of 1999) and the relevant Bank Indonesia regula - tions, a report relating to offshore financial assets and/ or liabilities of the lessee should be filed by the les - see with Bank Indonesia. Relating to loan documents, Bank Indonesia enacted various regulations which are intended to, among others, regulate reporting on the flow of foreign exchange activities and withdrawal of foreign exchange from offshore loans. These regula - tions set out the following, among others. • Foreign exchange generated from an offshore loan must be first withdrawn by the borrower through an Indonesian foreign exchange bank (the “Forex Bank”). This provision, however, is not applicable to leasing transactions (where the Indonesian les -
see is not directly receiving loans from the offshore creditors). • Offshore loan reporting obligations must be car - ried out by a borrower, covering offshore borrowing plan, initial reporting, as well as periodical report - ing to Bank Indonesia and the Ministry of Finance (MOF). The reporting obligation to Bank Indonesia is carried out electronically and such reporting is also delivered to the MOF. 2.1.5 Taxes/Duties Payable for Physical Execution of a Lease For any tax advice, please consult with an Indonesian tax consultant on this matter. 2.1.6 Licensing/Qualification of Lessors No licence is required for offshore lessors to extend a finance lease in Indonesia but, as a matter of practice, the lease is one of the prerequisite documents for reg - istering aircraft in Indonesia, in which the name of the owner and the lessor of the aircraft will be recorded in the aircraft register. 2.2 Lease Terms 2.2.1 Mandatory Terms for Leases Governed by English or New York Law While there is no particular form for a lease, to enable the registration of an aircraft with the DGCA, the term of the lease should be a minimum of two consecutive years and, during such period, the aircraft may not be registered in any other aircraft registration. For aircraft registration purposes, pursuant to DGCA Regulation No KP 311 of 2018 on Technical Guidance for Civil Aviation Safety Regulation Part 47 regarding Aircraft Registration Procedure, a copy of the lease should be legalised by a public notary. However, when reviewing the lease for aircraft regis - tration purposes, the DGCA would normally expect to see the following provisions included: • complete identification of the owner, the lessor and the lessee; • complete identification of the aircraft and the engine; • effective and expiration dates of the lease; • allocation of responsibilities between the lessor and the lessee; and
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