Introduction
The concept of a commercial trust has long been a staple in common law jurisdictions, such as Singapore, the United Kingdom, and the United States. However, in Indonesia, a civil law jurisdiction, the idea of a trust has only recently gained legal recognition. With the enactment of Law No. 4 of 2023 on the Development and Strengthening of the Financial Sector (the “P2SK Law”), Indonesia introduced a legal mechanism that enables the establishment of commercial trusts.
This article explores the framework of commercial trusts under the P2SK Law, the process to establish one, and the relevant regulatory and tax considerations. As a firm committed to delivering reliable corporate legal support, CPT Corporate offers Corporate Secretarial Services to assist businesses in navigating this emerging legal terrain.
What Is a Commercial Trust?
Definition and Structure
A commercial trust is a legal arrangement where a trustee holds and manages assets on behalf of a beneficiary, under the instructions of a settlor. The trustee is the legal owner of the assets but must act solely for the benefit of the beneficiary. Under the P2SK Law, commercial trust arrangements can now be created in Indonesia using licensed trustees.
Key Stakeholders
- Settlor: The party who owns the assets and establishes the commercial trust.
- Trustee: A licensed entity or individual who manages the trust assets.
- Beneficiary: The person or entity entitled to receive benefits from the trust.
Legal Basis: P2SK Law
Trust Arrangements Recognized by Law
Article 34 of the P2SK Law allows for two types of trust-like structures:
- Special Purpose Vehicles (SPVs) for securitization.
- Trust Fund Managers (Trustees) to manage assets on behalf of beneficiaries.
These provisions provide a robust legal foundation for the establishment of commercial trusts in Indonesia.
Licensing and Oversight
Trustees must be licensed and supervised by the Financial Services Authority (OJK). CPT Corporate, through its Corporate Secretarial Services, can guide companies in selecting and appointing qualified trustees.
Features of a Commercial Trust in Indonesia
Separation of Assets
Assets placed in a commercial trust are legally distinct from the trustee’s personal or corporate assets. This separation ensures that the trust assets are protected from claims against the trustee or settlor.
Bankruptcy Protection
Trust assets are not considered part of the bankruptcy estate of either the trustee or the settlor, adding an extra layer of security for beneficiaries.
Broad Asset Eligibility
The P2SK Law does not restrict the types of assets that can be included in a commercial trust. This includes cash, real estate, securities, and shares.
Confidentiality
Trustees are obligated to maintain the confidentiality of all transactions and data involving the settlor and beneficiary, in accordance with anti-money laundering regulations and international trust standards.
Establishing a Commercial Trust
Step-by-Step Process
Step 1: Appoint a Licensed Trustee
Appointing a trustee licensed by the OJK is the first and essential step.
Step 2: Draft a Trust Agreement
The trust agreement outlines the purpose, terms, responsibilities, fees, and duration of the commercial trust. Legal counsel is strongly advised during this phase.
Step 3: Transfer of Assets
The settlor transfers the designated assets to the trustee, who registers them under the trust.
Step 4: Regulatory Registration
Depending on the asset size and nature, a notification or registration with OJK may be required.
Step 5: Ongoing Management
Trustees are responsible for the continuous management, compliance, and reporting of trust assets.
CPT Corporate offers Corporate Secretarial Services to assist businesses with drafting agreements, asset transfers, and trustee liaison.
Regulatory Considerations
OJK Supervision
OJK oversees the licensing and activities of trustees, ensuring compliance with capital requirements and governance standards. Only OJK can initiate bankruptcy proceedings against a trustee, safeguarding the structure’s integrity.
Compliance with Other Laws
If a commercial trust holds shares in an Indonesian company, compliance with corporate, banking, and sector-specific laws is necessary. Trustee actions such as voting rights must align with legal provisions.
Anti-Money Laundering (AML)
Trustees must conduct thorough due diligence to comply with AML and counter-terrorism financing rules. Documentation of source of funds and identities of parties is mandatory.
Tax Considerations
Unclear but Developing Framework
As of mid-2025, Indonesia lacks specific tax regulations for commercial trusts. However, a regulation is expected before 2025 ends. Reasonable expectations include:
Income from Trust Assets
Income may be taxed at the trust level or passed to beneficiaries, depending on whether the trust is considered opaque or transparent.
Distribution Taxation
Distributions to beneficiaries may be taxed as personal income. Exceptions may apply for inheritance-type trusts.
Asset Transfers
Transferring assets to a commercial trust may not incur capital gains tax but could trigger administrative fees (e.g., land transfer duties).
Cross-Border Scenarios
If beneficiaries or trustees are non-residents, withholding taxes may apply. Indonesian tax residents are liable for global income, including from offshore trusts.
CPT Corporate’s Corporate Secretarial Services include consultation on upcoming tax compliance regulations related to commercial trusts.
Benefits of a Commercial Trust
- Asset Protection: Legal separation and bankruptcy immunity protect trust assets.
- Wealth Management: Effective for estate planning, succession, and investments.
- Confidentiality: Financial privacy for individuals and corporations.
- Flexibility: Diverse asset types and tailored agreement structures.
How CPT Corporate Can Help : Corporate Secretarial Services
CPT Corporate provides comprehensive Corporate Secretarial Services to support:
- Trustee appointment and licensing coordination
- Drafting and review of trust agreements
- Asset transfer compliance
- OJK registration guidance
- Tax and regulatory consultation
By offering end-to-end assistance, CPT Corporate ensures that the setup and management of your commercial trust in Indonesia is efficient, compliant, and legally sound.
Conclusion
The P2SK Law marks a significant evolution in Indonesia’s financial and legal landscape. For the first time, commercial trusts are formally recognized and regulated, opening new pathways for asset protection, investment structuring, and wealth planning. Businesses and individuals alike can benefit from these arrangements, provided they proceed with expert guidance.
With CPT Corporate’s experienced legal team and Corporate Secretarial Services, your journey to establishing a compliant and effective commercial trust in Indonesia becomes streamlined and secure.
Ready to explore Commercial Trusts in Indonesia?
Partner with CPT Corporate and gain access to specialized Corporate Secretarial Services tailored to your unique needs. Contact us today for a consultation and let our experts guide you through every legal and regulatory requirement.
Frequently Asked Questions (FAQ)
1. Is a commercial trust legal in Indonesia?
Yes, as of the P2SK Law enacted in 2023, commercial trusts are legally recognized in Indonesia.
2. Who can act as a trustee?
Only trustees licensed by the OJK (corporations, financial institutions, or approved individuals) may act as trustees.
3. What assets can be placed in a commercial trust?
The P2SK Law allows for a broad range of assets, including cash, shares, real estate, and more.
4. Are commercial trusts taxed in Indonesia?
Currently, there is no specific regulation. However, tax rules are expected to be issued by late 2025.
5. How can CPT Corporate assist me?
CPT Corporate offers end-to-end Corporate Secretarial Services to ensure proper formation, compliance, and ongoing management of your commercial trust.
