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Tax Allocation Agreement

Tax Allocation Agreement Template for Indonesia

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Key Requirements PROMPT example:

Tax Allocation Agreement

"I need a Tax Allocation Agreement under Indonesian law for a parent company and its three manufacturing subsidiaries, with specific provisions for handling regional tax variations and transfer pricing between the entities, to be implemented by March 2025."

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Document background
A Tax Allocation Agreement is essential for corporate groups operating in Indonesia where multiple entities share tax obligations or benefits. This document becomes necessary when companies within a group need to formalize their arrangements for sharing tax liabilities, credits, or benefits in compliance with Indonesian tax regulations. It is particularly relevant for consolidated groups, holding company structures, or joint ventures where tax implications need to be properly allocated among participating entities. The agreement ensures transparency in tax allocation methods, establishes clear payment procedures, and defines compliance responsibilities while adhering to Indonesian tax laws, including Law No. 36 of 2008 on Income Tax and Law No. 28 of 2007 on General Tax Provisions. It also addresses requirements for maintaining proper documentation for tax authorities and managing potential tax audits.
Suggested Sections

1. Parties: Identification of the participating entities, including their legal status and registration details under Indonesian law

2. Background: Context of the agreement, relationship between the parties, and purpose of the tax allocation arrangement

3. Definitions: Definitions of key terms including 'Group Tax Liability', 'Individual Tax Liability', 'Tax Benefit', and other relevant terms

4. Scope of Agreement: Details of what taxes are covered and the period of application

5. Tax Allocation Methodology: Agreed method for calculating and allocating tax liabilities between parties

6. Payment and Settlement: Procedures and timing for settling tax allocations between parties

7. Record Keeping and Information Sharing: Requirements for maintaining tax records and sharing relevant information

8. Compliance Obligations: Responsibilities of each party regarding tax compliance and reporting

9. Term and Termination: Duration of the agreement and circumstances for termination

10. Dispute Resolution: Procedures for resolving disagreements about tax allocations

11. Governing Law: Specification of Indonesian law as governing law and relevant jurisdictional matters

12. General Provisions: Standard contractual provisions including notices, amendments, and severability

Optional Sections

1. Regional Tax Considerations: Include when parties operate in different Indonesian regions with varying local tax requirements

2. International Tax Provisions: Include when any party has international operations or foreign ownership

3. Group Restructuring Provisions: Include when there's likelihood of corporate restructuring or changes in group composition

4. Tax Audit Procedures: Include when specific procedures for handling tax audits need to be agreed upon

5. Tax Benefits Allocation: Include when there are specific tax benefits or incentives to be shared among parties

6. Transfer Pricing Provisions: Include when transactions between parties require specific transfer pricing considerations

Suggested Schedules

1. Schedule 1 - Calculation Methodology: Detailed formulas and examples of tax allocation calculations

2. Schedule 2 - Payment Procedures: Specific procedures, timelines, and banking details for settlements

3. Schedule 3 - Reporting Templates: Standard forms and templates for tax allocation reporting

4. Schedule 4 - Group Structure: Current corporate structure showing relationships between parties

5. Appendix A - Relevant Tax Regulations: List of applicable Indonesian tax regulations and guidelines

6. Appendix B - Compliance Calendar: Timeline of key tax compliance and payment dates

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Accounting Period
Actual Tax Liability
Agreed Portion
Allocation Method
Annual Tax Return
Applicable Law
Business Day
Calculation Date
Compliance Requirements
Consolidated Group
Corporate Income Tax
Dispute
Effective Date
Fiscal Year
Group Companies
Group Tax Liability
Individual Tax Liability
Indonesian GAAP
Loss Offset
Member Company
Notice
Parent Company
Payment Date
Regulatory Authority
Related Party
Relevant Tax
Settlement Period
Subsidiary
Tax Adjustment
Tax Assessment
Tax Authority
Tax Benefit
Tax Credit
Tax Documentation
Tax Loss
Tax Payment
Tax Period
Tax Records
Tax Reference Number
Tax Return
Tax Savings
Tax Year
Taxable Income
Territory
Value Added Tax
Clauses
Interpretation
Definitions
Tax Calculation
Payment Obligations
Settlement Procedures
Information Exchange
Compliance
Record Keeping
Audit Rights
Confidentiality
Representations and Warranties
Tax Adjustments
Dispute Resolution
Force Majeure
Term and Termination
Governing Law
Jurisdiction
Notices
Assignment
Amendment
Severability
Entire Agreement
Further Assurance
Indemnification
Tax Reporting
Group Membership
Transfer Pricing
Tax Benefits Allocation
Liability
Default
Remedies
Costs and Expenses
Authority and Capacity
Third Party Rights
Relevant Industries

Financial Services

Manufacturing

Mining and Resources

Energy

Real Estate

Infrastructure

Technology

Telecommunications

Retail and Consumer Goods

Transportation and Logistics

Healthcare

Agribusiness

Relevant Teams

Finance

Tax

Legal

Compliance

Treasury

Internal Audit

Risk Management

Corporate Affairs

Accounting

Financial Planning & Analysis

Relevant Roles

Chief Financial Officer

Tax Director

Finance Director

Corporate Controller

Tax Manager

Financial Controller

Legal Counsel

Compliance Officer

Treasury Manager

Group Financial Controller

Tax Accountant

Corporate Secretary

Risk Manager

Internal Audit Manager

Industries
Law No. 36 of 2008 on Income Tax: The primary legislation governing income tax in Indonesia, including provisions for corporate taxation, tax rates, and calculation methods
Law No. 42 of 2009 on Value Added Tax: Regulations concerning Value Added Tax (VAT) and Luxury Goods Sales Tax, which may affect inter-company transactions and tax allocations
Indonesian Civil Code (KUHPerdata): Provides the basic framework for contractual relationships and agreements under Indonesian law
Law No. 33 of 2004 on Fiscal Balance: Regulates financial balance between central and regional governments, including tax sharing arrangements
Government Regulation No. 94 of 2010: Details the calculation and settlement of corporate income tax, including provisions relevant to group companies
Minister of Finance Regulation No. 43/PMK.03/2008: Specific regulations on the implementation of tax treaties and international tax arrangements
Law No. 40 of 2007 on Limited Liability Companies: Governs corporate structures and relationships between related companies, which is relevant for tax allocation agreements
Director General of Tax Regulation PER-32/PJ/2011: Guidelines for transfer pricing documentation and related party transactions
Law No. 28 of 2007 on General Tax Provisions: Provides the general framework for tax administration, including rights and obligations of taxpayers
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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