Firms can carry over forex losses

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)