Obligation for Using Rupiah Currency in Indonesia Territory
This article is released to remind the regulation for investors and entities in Indonesia about obligation for using Rupiah currency in Indonesia territory. Starting on July 01, 2015, Indonesia government clearly stated the obligation for using Rupiah currency for each transaction in Indonesia territory. The obligation for using Rupiah is applied for personal or business entity, permanent resident or non-resident, local or foreign company, cash or non-cash transactions. The legal basis for this policy is Indonesia Law No. 7 Year 2011 about currency, Bank Indonesia (BI)Regulation No.17/3/PBI/2015 and Bank Indonesia Circular Letter No.17/11/DKSP dated onJune 01, 2015. At the moment, BI released this regulation as their response that many transactions in Indonesia territory, even for retail or domestic trading, apply non-Rupiah currencies (mostly in US Dollar) as the price, transaction values or settlement base.
The law enforcement of the obligation for using Rupiah are tiered sanctions. For breaching in quotation or contract obligation in Rupiah and the obligation for report submission, administrative sanction will be given in form of written warning. Next, Bank Indonesia can recommend the responsible authority to take action according to its authority,e.g. cancellation of business permit or termination of business activities. For breaching in cash transactions, sanction will be appliedmaximum of 1 year confinement sanction and maximum penalty of IDR 200 million. Meanwhile for breaching in non-cash transactions, administrative sanctions will be given in form of written warning and fine to be paid as of 1% ofthe transaction values and/or maximum is IDR 1 billion.
The obligation for using Rupiah is applied for all transactions that has purpose to pay and other money settlement obligation. Rupiah obligation is also included in term of price listing which are contained in:
- Price tag, e.g. price tag at sales items;
- Service fees, e.g. agent feesfor buying and selling property, travel servicse, and consultant services;
- Rental fees, either for property, vehicle and equipment rent;
- Tariff, e.g. container loading and unloading fees at the port or airplane ticket tariff, and cargo;
- Price lists, e.g. restaurant menu price list; vehicle sales promotion list;
- Contract, e.g. price clause or listed price in a contract or agreement;
- Offering and ordering document, bills, e.g. price clause printed in an invoice, delivery order, purchase order and/or;
- Proof of payment, e.g. price listed in a receipt.
Meanwhile according to the regulation, certain transactions are still exempt from obligation to use Rupiah currency. Example of those certain types of transaction are as follow:
- Certain transactions for state budget implementation;
- Giving or receiving grants from or to overseas;
- International trading transactions;
- Savings in the bank in foreign currency;
- International financing transactions;
- Transactions in foreign currency based on the regulation provision.
The full version of those regulations can be downloaded by clicking link at the end of article. If you would prepare agreement or apply transaction using foreign currency instead of Rupiah, we strongly suggest reading and understanding the regulation first comprehensively to ensure your transaction is comply with the currency regulation. Further questions could be discussed with our specialists at firstname.lastname@example.org.