The Director General of Taxes restipulates subjects and objects receiving the VAT exemption facility on imports or acquisition of certain strategic taxable goods (Barang Kena Pajak/BKP). The policy is stated in Press Release No. SP-29/2021 (SP-29/2021).

These provisions constitute implementing provisions of Article 6 of Government Regulation No. 48 of 2020 concerning Imports and/or Supplies of Certain Strategic Taxable Goods that are Exempt from the Imposition of Value Added Tax (Gov. Reg. 48/2020).

The restipulation of subjects and objects as recipients of the VAT exempt facility includes the following:

i.	adding subjects eligible for the facility, i.e. Engineering, Procurement, and Construction (EPC) contractors that carry out integrated construction work;
ii.	adding liquified natural gas (LNG) as a new object eligible for the facility;
iii.	broadening the definition of machinery and plant equipment; and
iv.	adding provisions related to the costs of electricity installation and costs of electricity loads, including the definition of electricity which is exempt from VAT imposition.

In addition to regulating subjects and objects eligible for the facility, SP-29/2021 also describes changes in the procedures for the granting of VAT exempt facility and VAT payments for certain strategic BKP.

According to the Directorate General of Taxes (DGT), the procedures have been changed to render ease in doing business and provide legal certainty. Four procedures for the granting of VAT exemption facility are described in SP-29/2021.

First, procedure for the granting of VAT exempt facility on imports or supplies of machinery and plant equipment using a VAT Exemption Certificate (Surat Keterangan Bebas/SKB). In this case, Taxable Persons for VAT Purposes (Pengusaha Kena Pajak/PKP) submit VAT SKB to the DGT through the Indonesia National Single Window (INSW) System. Second, changes in the mechanism for the issuance of SKB. SKB are currently issued using an automated system that is integrated with the Directorate General of Customs and Excise (DGCE), the Indonesian Investment Coordinating Board (Badan Koordinasi Penanaman Modal/BKPM), and the National Single Window Institution.

Third, procedure for the granting of VAT exempt facility on supplies of residential units of simple proprietary flats by integrating it into the application system of the Ministry of Public Works and Public Housing. Fourth, procedure for VAT payments for certain strategic BKP that have been exempted, but are not used according to their original purpose or are transferred.

Further provisions pertaining to procedures for the granting of VAT exempt facility on certain strategic taxable goods can be seen in Minister of Finance Regulation No. 115/PMK.03/2021.

Restipulation of VAT Exemptions on Certain Strategic Taxable Goods