Page 28 - SUSTAINABILITY ISSUES & COVID-19

From the capital structure, it can be seen that most of the share ownership of each subsidiary, namely PT PG Rajawali
I and PT PG Rajawali II is held by PT Rajawali Nusantara Indonesia (Persero), while PT PG Candi Baru has little share
ownership by a minority, this is what later will underlie the business merger that will be carried out in which PT PG
Rajawali I and PT PG Rajawali II will be merged into one. The three main reasons behind this merger include the existence
of similarity in product lines and the resulting business, namely sugar, where PT PG Rajawali I, PT PG Rajawali II, and
PT PG Candi Baru both have the same brand in producing. sugar and have their respective factories. From this factor,
as the parent company will carry out a business merger to centralize the place of production. The second factor is the
existence of company efficiency objectives, namely by cutting costs, costs that can be minimized, namely by unifying
sugar factories. From concentrating the place of production into one, automatically the cost matching revenue will
be reduced and can cut unnecessary production costs. The last factor is competitiveness in the market, where the
industrial world is increasingly developing, making PT Rajawali Nusantara Indonesia (Persero) make a strategy to face
competitiveness in the market, one of which is a business merger that will be carried out. In the Company Long-Term
Plan (RJPP) of PT Rajawali Nusantara Indonesia Persero in 2020, it is discussed the restructuring that will be carried
out in 2020-2021, namely the merger between PT Rajawali I Sugar Factory and PT Rajawali II Sugar Factory to be more
efficient.

From the three supporting backgrounds above, PT Rajawali Nusantara Indonesia (Persero) wants to achieve the goal
of being able to contribute greater profits to joint shareholders so that they are under the same control. The type of
business merger that will be applied based on Attachment SE-23 PJ42/1999 which discusses the Tax Treatment for
Corporate Restructuring is a horizontal business combination (Brother-Sister Merger).

As company management who understands taxation rules, of course, tries to comply with the applicable regulations,
but on the other hand, company management does not deny that it provides greater shareholder value to shareholders,
thus causing conflict where the company management plans to use the book value method. for the tax calculation.
However on the other side in the method suggested by the Directorate General of Taxation (DGT) is the market value
method. The current condition is not yet known whether the use of book value to be proposed will be approved by
the Directorate General of Taxes (DGT). After the merger was implemented, on the side of taxation will rise to two
possibilities which income tax becomes much higher if the result of the merger the company experienced growth and
develop as expected, or the income tax would be lower if the company develops is not significant enough or is more
likely to stagnate. So the amount of tax really depends on the purpose of the merger itself.

2. LITERATURE REVIEW

2.1 Merger
Is a merger of two or more companies into one company (Brigham, 2006: 377). In the Government Regulation of the
Republic of Indonesia Number 27 of 1988 defines a business combination as follows:

“Legal actions were taken by two or more companies to merge with other existing companies
and subsequently the merged companies will be dissolved.”

In Baker, Lembke, and King (2010), a business combination is a business combination where the assets and liabilities
of the acquired company or combined with the assets of the company that combines or acquires them. It can be
concluded that merger and acquisition are mergers of two or more companies that have a strong and clear legal basis
because at the time of the merger one of the companies that were dissolved was also from its operational activities and
left its legal status as separate entities. After the merger occurs, the status will change to become one part (the same
business unit) under the surviving firm.

International Conference on Sustainability 27
(5 Sustainability Practitioner Conference)
Th