ASEAN Regulatory Brief: Share Capital, Indonesian Corporate Income Tax Reductions, and Cyber Security in Singapore

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LOGO-in-ASEAN-1Indonesia: Share Capital Requirements Changed for Small Companies

The government recently announced an amendment regarding capital requirements for small companies. The new regulation states that the founder of a company may choose a smaller amount of authorized capital in the event the equity or the net worth of the company is at least U.S. $3790 (50 million rupiah). The regulation permits founders of the company to choose an authorized share capital amount of less than U.S. $3790 50 million rupiah in the company’s deed of establishment.

In addition, the new regulation specifies a new requirement for paid-up share capital. Companies are currently mandated to have at least 25 percent of the authorized capital issued and paid-up. The new regulation adds that the payment of paid-up capital must be evidenced by a proof of deposit. As part of the compliance process for new requirements, companies need to digitally submit supporting documentation to the Ministry of Law and Human rights within 60 days as of the signing date on the deed of establishment. The new regulation will empower smaller companies to become operational in a shorter time span due to the relaxed capital requirements.

Professional Service_CB icons_2015RELATED: Pre Investment and Market Entry Advisory from Dezan Shira & Associates
Indonesia: Government Plans to Slash Corporate Income Tax

Bambang Brodjonegoro, Finance Minister of Indonesia, recently announced that the country is planning to slash its corporate income tax rate to 20 percent this year. The statement proposing the change was announced after a meeting between Brodjonegoro and the national parliamentary commission which oversees taxes.

The change is touted as a key to the revitalization of Indonesia’s economy. The government has lowered the rate to attract more investment and make the nation’s tax environment competitive compared to its Asian neighbors. Specifically, the rate aims to discourage local companies from seeking profits in lower tax markets such as Singapore. The government believes that higher rates of taxation have often led to tax evasion in Indonesia. The lowering of the rate is expected to counter this problem. Economists believe that the policy will significantly increase the level of investment in Indonesia and make the country uber competitive in the Asian market.

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Singapore: New Cybersecurity Act to be Introduced Next Year

Yacoob Ibrahim, Minister for Communications and Information recently said that Singapore plans to introduce a new Cybersecurity Act next year. The Act will mandate operators of Singapore’s critical information infrastructure to take various measures ensuring the resilience of information technology (IT) systems. The Act will also require operators to report cybersecurity incidents. In addition, the Act proposes greater powers to Singapore’s Cybersecurity Agency in hopes of helping the institution manage cyber incidents and uphold standards of cyber security providers.

The Act is expected to mitigate the level of cybercrime in Singapore. It also seeks to ensure security of information for companies based in Singapore. The Act is a welcome move for businesses that  currently face diverse cyber threats. The Act is expected to mitigate the financial and reputational risks associated with such cyber threats and comes in the wake of a recent independent survey by insurance group AIG. The survey noted that companies are becoming increasingly aware of the cyber threats and have been seeking insurance from companies such as AIG to address the problem. The Act seeks to create a conducive cyber environment for companies to operate.


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Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email asean@dezshira.com or visit www.dezshira.com.

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