Firms can carry over forex losses

JAKARTA (JP): A company could carry over their losses or gains from exchange rate differentials resulting from the "extraordinary" depreciation of the rupiah into the following years' income statement, the Indonesian Institute of Accountants said.

The institute said in a statement yesterday that the level of depreciation could be categorized as extraordinary when it far exceeded -- by at least 133 percent -- the average depreciation rate in the last three years.

In addition, companies could carry over their foreign exchange-related losses only if they were unable to hedge their offshore debt due to the unavailability of such hedging facilities, or, should such a facility be available but the hedging premium expensive.

"Based on the exchange rate and swap premium data from Bank Indonesia, the exchange rate differentials recorded since Aug. 14 until the promulgation of this statement have met all of those conditions," the institute said.

The rupiah has depreciated by about 35 percent against the U.S. dollar since early July, compared with an average of 4 percent to 5 percent per annum since the early 1990s.

But the institute noted that losses or gains from exchange rate differentials recorded before Aug. 14 had to be calculated in this year's income tax returns.

The institute's statement is in line with an earlier statement by the Directorate General of Tax which says that losses from the sharp depreciation of the rupiah could be calculated in income tax returns in following years. (rid)