THE LEGAL CONSTRUCTION OF SHELL COMPANY IN THE PERSPECTIVE OF INDONESIAN COMPANY LAW (Case Study: Panama Papers)

Abstract

In the mid-2015, the world was preoccupied with the phenomenon of the leaked of 1,5 million confidential documents of Panamanian Law firm, Mossack Fonseca, called Panama Papers. The documents have leaked the dark secrets of business and finance of entrepreneurs around the world, including Indonesia by establishing shell companies in tax havens for tax avoidance. Furthermore, this research will try to analyzed the perspective of Indonesian Company Law on Shell Company, also as a shell company, it analyzed the responsibilities of its shareholders based on Indonesian Company Law in comparison with Panamanian Company Law as the tax havens in Panama Papers. This research is a normative juridical research that was conducted by examining law and regulations, and then it used a comparative approach by comparing with Panamanian regulations on Company. As a result, under Indonesian Company Law, the shell company has been seen as ‘Subsidiary Company’ and ‘Special Purpose Vehicle (SPV) Company’. As for its shareholders responsibilities, both under Indonesian and Panamanian Company Law they have the same regulation in which as the legal entity, the shell company shareholders liability is limited, and between shareholders and company assets are separated. However, the difference lies on the transparency of shareholder’s information. As a matter of reducing these dark business activities, the government shall amend the company regulation which can cover all the business activity in Indonesia, so it can have a legal certainty to protect the entrepreneurs, as well as reducing the imposed tax on company. It is also important for the government to encourage its citizens to do tax amnesty and assets repatriation.