SURABAYA - SURABAYA – Government Regulation Number 55 of 2022 concerning Income Tax regulates on ass associated enterprise. In these rules there are several conditions that cause an associated enterprise.

An associated enterprise is a state of dependence or attachment of one party to another party due to ownership or participation in capital, control, or family relationships by blood or kinship.

“Which results in one party being able to control the other party or not being independent in running a business or carrying out activities”, write the part of Article 33 paragraph (1) PP 55/2022

The arrangements related to associated enterprise in PP 55/2022 are not much different from the provisions in Article 4 in Minister of Finance Regulation 22/2020. One of the differences lies in the criteria in the condition of a associated enterprise over mastery. Minister of Finance Regulation 22/2020 only mentions 5 criteria, while PP 55/2020 mentions 6 criteria. Additional 1 of these criteria is the presence of two or more parties who are under the control of the same party directly and/or indirectly.

An associated enterprise due to ownership or capital participation arises when a taxpayer owns capital directly or indirectly, at least 25% in another taxpayer. The same condition also occurs if the relationship between taxpayers with participation of at least 25% in two or more taxpayers or the relationship between two taxpayers or more last mentioned.

Then, an associated enterprise due to mastery is considered to exist if it fulfills one of the following 6 criteria. First, one party controls another party or one party is controlled by another party, directly and/or indirectly. Second, two or more parties are under the control of the same party directly and/or indirectly. Third, one party controls another party or one party is controlled by another party through management or the use of technology.

Furthermore, there are same people who are directly and/or indirectly involved or participate in making managerial or operational decisions on two or more parties. Fifth, the parties who are known commercially or financially or claim to be in the same business group. Finally, one party claims to have an associate enterprise with the other party.

A associated enterprise due to blood or marriage kinship is considered to exist in the event that there is a kinship both by blood and by kin in the lineage and/or one degree sideways.