DECISION OF DIRECTOR GENERAL OF CUSTOMS AND EXCISE
No. KEP-55/BC/1999

ON
PROCEDURE FOR THE TRANSFER OF CAPITAL GOODS FOR FOREIGN-INVESTMENT (PMA)/DOMESTIC-INVESTMENT (PMDN) COMPANIES AND NON-PMA/PMDN COMPANIES

DIRECTOR GENERAL OF CUSTOMS AND EXCISE,

Attachment

Considering:

that in the framework of promoting services and in view of legal certainty in the transfer of capital goods for PMA/PMDN and non-PMA/PMDN companies, it is deemed necessary to regulate further the procedure for the transfer of capital goods on the basis of Decree of the Minister of Finance No. 298/KMK.01/1997 dated July 4,1997 joint No. 394/KMK.01/1999 in a decision of the Director General of Customs and Excise.

In view of:

• a. Law No. 10/1995 on customs affairs (Statute Book No. 75/1995, Supplement to Statute Book No. 3612);
• b. Decree of the Minister of Finance No. 297/KMK.01/1997 dated July 4, 1997 dated November 3, 1999 on the exemption from import duties on the import of machinery, goods and materials in the framework of the construction of industries/service industries;
• c. Decree of the Minister of Finance No. 546/KMK.01/1997 dated November 3, 1997 on the exemption of import duties on the import of machinery, goods and materials in the framework of the development of industries/service industries;
• d. Decree of the Minister of Finance No.291/KMK.05/1997 dated June 26, 1997 the latest to have been amended by No. 349/KMK.01/1999 dated June 24, 1997 on bonded zones;
• e. Decree of the Minister of Finance No. 298/KMK.01/1997 dated July 4, 1997 joint No. 394/KMK.01/1999 dated August 3, 1999 on the provision on the transfer of capital goods for PMA/PMDN companies and non-PMA/PMDN companies.

DECIDIES:

To stipulate:

DECISION OF THE DIRECTOR GENERAL OF CUSTOMS AND EXCISE ON THE PROCEDURE FOR THE TRANSFER OF CAPITAL GOODS FOR PMA/PMDN COMPANIES AND NON-PMA/PMDN COMPANIES.

Article 1

Referred to in this decree as:

• a. transfer shall be the transfer of a right, asset transfer, changes in the use of capital goods for other activities beyond the business activities, or writing off of capital goods from corporate assets with respect to companies or industries obtaining the facilities of import duties on the import of machinery and/or goods and services;
• b. capital goods shall be machinery, namely every machine, machine matter, factory installation equipment, equipment or instruments related directly to the activities of constructing or developing industries or service industries;
• c. goods and materials shall be all goods or materials, irrespective of the types and composition, used as materials or components to produce finished goods;
• d. "Sale and Lease Back" shall be a transaction from a "Lessee" (industrial company or service industry receiving the facility to a "Lessor" I the leasing company) on condition that the said capital goods are still kept by or used by the recipient of the facility.

Article 2

(1) As for industries or service industries, either PMA or PMDN or non-PMA/PMDN, already obtaining the facility of exemption from the import duty on machinery, goods and materials in the framework of the construction or development of industry, including also the industry in a bonded zone, may conduct the transfer of machines without the obligation to pay the import duty owing and the fine on the facility already received if the period of 2 (two) years has been exceeded as from the date of import or since the machines first became corporate assets.

(2) As for industries or service industries referred to in sub-article (1) already obtaining the facility of exemption on import duty on goods and materials, and using machines originating from domestic purchases, may transfer the machines referred to without the obligation to pay import duty on the goods and materials, if the said machines have exceeded a period of 2 (two) years as from their purchase or since they first became corporate assets.

Article 3

The transfer of machines prior to a period of 2 (two ) years may b permitted without entailing the obligation to pay outstanding import duties or fines on the facilities already received in the case of:

• a. force majeure, so that the machines or capital goods undergo serious damage and can no longer be used, such as in the case of a fire, etc.;
• b. the transfer of capital goods assets from the company receiving the facility of import duty to other companies receiving import duty facilities, on the basis of a recommendation from the Investment Coordinating Board (BKPM); or
• c. the re-export of the machines or capital goods, on the basis of a recommendation from BKPM.

Article 4

(1) The transfer of capital goods prior to 2 (two) years, as meant in Article 2, with the exception of the transfer of capital goods as meant in Article 3, may result in the cancellation of the facilities granted.

(2) The transfer without permit of capital goads prior to the period of 2 (two) years as meant in Article 3 shall result in the cancellation of the facilities granted.

(3) The transfer without a permit from the Director General of capital goods after the period of 2 (two) years shall result in the cancellation of the facilities granted to the said capital goods and the company shall be obligated to pay the outstanding import duty and the fine on the facilities received.

(4) With respect to the transfer referred to in sub-articles (1) and (2) the company shall be obligated to pay the outstanding import duties and the fines on the facilities it receives on:

• a. Imported machinery; and/or
• b. goods and materials (auxiliary materials) the quantity of which shall be in proportion to the capacity of the machine transferred.

Article 5

A transfer of capital goods shall not be included in the definition of the transfer of capital goods if it is conducted by means of "Sale and Back" on condition that the said capital goods are still found at the location of the company and use by the company receiving the facility in its business activities.

Article 6

(1) An application to obtain a license for the transfer of capital goods as meant in Articles 2 and 3 shall be filed to the Director General of Customs and Excise, attention the Director of Customs Facilities.

(2) The procedure for the filling of the application referred to in sub-article (1) shall be put in the attachment to this decision.

Article 7

The granting of the lice-se as meant in Articles 2 and 3 shall be expressed in a decree of the Minister of Finance signed by the Director General of Customs and Excise, attention the Director of Customs Facility on behalf of the Minister of Finance.

Article 8

(1) Industries or service industries obtaining the facility of approval of transfer, shall, immediately after the realization of the transfer of machinery, be obligated to submit a report on the transfer to the Director General of Customs and Excise, attention Director of Verification and Audit, the Director General of Taxation and the chairman of the Investment Coordinating Board.

(2) Attached to the report on the transfer as referred to in sub-article (1) shall be:

• a. Xerox copy of a decree on the approval of the transfer of machinery as meant in Article 7;
• b. documents serving as evidence of the transfer.

Article 9

With the enforcement of this decision, Circular of the Director General of Customs and Excise No. SE-05/BC/1998 dated March 11,1998 shall be declared null and void.

Article 10

This decision shall take effect as from August 3, 1999.

Stipulated in Jakarta
On August 26, 1998
DIRECTOR GENERAL,
sgd
DR. R.B. PERMANA AGUNG D. MSc

Attachment to DECISION OF DIRECTOR GENERAL OF CUSTOMS AND EXCISE
No. KEP-55/BC/1999