INDONESIA Law and Practice Contributed by: Agus Ahadi Deradjat, Gustaaf Reerink and Adri Dharma, ABNR Counsellors at Law
planning will be evidenced by confirmation or approv - al issued by the Ministry of Agrarian Affairs and Spatial Planning/National Land Agency (MOA) via the OSS system, which constitutes a prerequisite for obtaining a business licence. There is also a requirement under the prevailing regulations pertinent to the industrial sector, where a manufacturing industry must be located within an industrial estate or an area designated for industry. This requirement may be exempted upon approval from the MOA. Environmental Matters Business undertakings are required to obtain environ - mental approval for every type of business they carry out in Indonesia. The type of environmental approval required depends on the impact of the business on the environment: • an environmental impact analysis ( Analisis Menge- nai Dampak Lingkungan (AMDAL)) is required for a business having a significant impact on the envi - ronment; • an Environmental Management Efforts and Envi - ronmental Monitoring Efforts ( Upaya Pengelolaan Lingkungan Hidup dan Upaya Pemantauan Ling- kungan Hidup (UKL-UPL)) report is required for a business having no significant impact on the environment; and • a Letter of Undertaking of Environmental Manage - ment and Monitoring ( Surat Pernyataan Pengelo- laan Lingkungan (SPPL)) is required for a business that has no significant impact on the environment and does not meet the criteria mandating an AMDAL or UKL-UPL. Environmental approval is also a prerequisite for busi - ness licensing in the OSS system. Asset and Land Acquisition Should land acquisition be necessary for FDI, the types of land title that can be registered under the name of the company pursuant to the Indonesian Agrarian Law (Law No 5 of 1960 regarding Basic Regulations for Agrarian Affairs) are:
• the right to build ( hak guna bangunan (HGB)) – the right of the holder to utilise the land to build a new establishment or use anything that has been previ - ously built on the land on an exclusive basis; • the right to cultivate ( hak guna usaha (HGU)) – the right to cultivate a plot of state land for agricul - tural purposes, and to benefit from the proceeds derived from the agricultural activities conducted on the land; and • the right to use – a subsidiary right upon land that may be granted by the holder of an HGB or HGU land title to another party. The procedure for acquiring a plot of land in Indonesia depends on whether or not the land is certified (ie, has been registered with the land office and issued with a land title) or uncertified (ie, has not been registered with the land office nor issued a land title). In general, for uncertified land, the process involves the acquisition of the land from the original landowner by the purchaser, and registration of the acquired land with the national land agency. For certified land, the process involves the transfer of the title from the origi - nal registered landowner to the purchaser, followed by the registration of the transfer with the land agency. Sanctions Business undertakings that fail to comply with the obligations under the Investment Law and its imple - menting regulations (eg, the reporting obligation) are liable to administrative sanctions, ranging from a writ - ten warning to limitations on business activity, sus - pension of business and/or investment activities, and revocation of the right to conduct business or invest - ment activities. These sanctions would be sequentially imposed by the BKPM on business undertakings. In addition to administrative sanctions, business under - takings may still be subject to other sanctions under the prevailing law and regulations.
9. Tax 9.1 Taxation of Business Activities
The tax imposed on a company doing business in Indonesia depends on the line of business carried out by that company.
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