Changes to regulations governing withholding tax in
Indonesia could limit the appeal of issuing bonds as a
financing tool. Borrowers may turn to banks for financing
unless new structures are created.
The new regulations (61/PJ/2009 and 62/PJ/2009 from the
Directorate General of Taxation) limit the impact of existing
tax treaties to issuers that fit particular criteria and impose
a 20% withholding tax on all other transactions.
Joel Hogarth, a partner in OMelveny & Myerss
Singapore office, believes issuers would need to factor this