BERITA TERKINI
JAKARTA, DDTCNews - Tax consultants play a pivotal role, in particular, for corporate taxpayers, in the implementation of Collective Investment Contracts – Asset-Backed Securities (CIC-EBA), which involve complex financial transactions and investment products.
Managing Partner of DDTC Consulting, David Hamzah Damian, outlined 3 key roles of tax consultants, namely preparing tax analysis reports, conducting procedures and processes in tax analysis as well as providing advice and notes on tax risks within CIC-EBA structures.
“Frankly, we [tax consultants] are better described as a supporting profession within the capital market. However, the majority of questions from stakeholders revolve around taxation, given its significant influence on the financial modelling of CIC-EBA,” he said during the Go Public Workshop: Asset-Backed Securities in Focus: Opportunities and Challenges in Indonesia's Market, as quoted on Thursday (28/8/2025).
He further elaborated 3 key roles of consultants in the issuance of the CIC-EBA, including preparing analyses and drafting reports, determining tax assumptions and providing advisory on tax risks associated with such activities.
David explained that there are 5 key tax analysis outputs produced by tax consultants. First, the analysis of the taxpayer’s subjective requirements within CIC-EBA. He noted that the custodian bank, which administers the collective custody of securities, acts as the representative of CIC-EBA and is treated as a corporate taxpayer.
Second, the analysis of CIC-EBA tax obligations. Tax consultants must establish tax assumptions to estimate potential tax payable, including identifying applicable taxes, such as income tax (pajak penghasilan/PPh in Indonesian) and value added tax (VAT), once a taxpayer fulfils the subjective requirements as a taxpayer.
“Tax assumptions essentially involve calculating the hypothetical tax exposure of the CIC-EBA. Does a transfer of underlying assets constitute a VAT object? What does CIC-EBA income consist of? Which expenses are deductible? Are allowances for the write-off of bad debts allowed?” David further explained.
Third, tax analysis on the transfer of assets from the originator to the CIC-EBA issuer, including mapping tax risks arising from discrepancies in transfer values.
“For example, the underlying assets may be valued at IDR500 billion, but securitisation may generate IDR1 trillion in cash. How should the difference be treated? This becomes a critical issue requiring mitigation,” he noted.
Fourth, tax analysis of payments of fees to issuers, originators or custodians. These activities involve services and may give rise to withholding tax.
“It is relatively straightforward to assess whether such services fall within banking services or otherwise. Depending on whether the entity is a bank, financial institution or another type of entity, the treatment may differ. In simple terms, it may or may not constitute a taxable object,” he added.
Fifth, tax analysis on income, including identifying tax implications and potential income tax exposure on interest, dividends and gains from the transfer of CIC-EBA participation units.
David emphasized that prior to conducting analysis, tax consultants must undertake several key steps, including identifying relevant parties for information gathering, conducting interviews, attending coordination meetings and reviewing applicable regulations and other relevant provisions. They must also clarify the scope and limitations of the tax analysis being performed.
Following the analysis, consultants are expected to map potential risks faced by taxpayers, formulate mitigation strategies and provide recommendations that can be legally defended should such risks be scrutinised by tax authorities in the future.
He illustrated that consultants must map whether future income assets derived from CIC-EBA securitisation would be subject to taxation, as this could pose risks for taxpayers.
“In the case of future income, funds are received upfront. As such, what is the corresponding tax treatment? Since tax applies to any increase in economic capacity, we must carefully assess how such securitised future income should be treated,” David explained.
Moreover, tax consultants must distinguish between fixed cash flow and non-fixed cash flow asset-backed securities, as each entails different tax treatments and implications.
“Our role is to highlight high-risk areas and communicate them to other professionals, such as investment managers, legal advisors and public accountants, to complement their processes. This may also lead to identifying alternative solutions for risk mitigation,” David concluded. (rig)
