The Director General of Taxes stipulates low-risk Taxable Persons for VAT Purposes (Pengusaha Kena Pajak/PKP) and the implementation of tax refunds for taxpayers of certain criteria, taxpayers of certain requirements, and low-risk PKP. The policy is stipulated under the Director General of Taxes Regulation No. PER-04/PJ/2021 concerning the Stipulation of Low-Risk Taxable Persons for VAT Purposes and Implementation of Preliminary Tax Refunds for Taxpayers of Certain Criteria, Taxpayers of Certain Requirements, and Low-Risk Taxable Persons for VAT Purposes and Special Purpose Companies or Collective Investment Contracts as Low-Risk Taxable Persons for VAT Purposes (PER-04/2021).
The regulation comprises two material contents, i.e the stipulation of low-risk PKP and the implementation of preliminary tax refunds. The regulation has taken effect as of 16 March 2021. As per Article 3 of PER-04/2021, PKP that can be designated as low-risk PKP consist of eight parties.
First, companies whose shares are traded on a stock exchange in Indonesia. Second, State-Owned Enterprises (Badan Usaha Milik Negara/BUMN) and Regional-Owned Enterprises (Badan Usaha Milik Daerah/BUMD) as per statutory provisions on BUMN and BUMD. Third, PKP that has been confirmed as a Main Partner (Mitra Utama/MITA) of Customs.
Fourth, PKP that has been confirmed as an Authorized Economic Operator (AEO). Fifth, manufacturers or producers other than Taxable Persons for VAT Purpose as referred to in points one to four, with a place to carry out production. Manufacturer or producer PKP refer to manufacturers or producers that within their businesses, produce taxable goods (Barang Kena Pajak/BKP) or taxable services (Jasa Kena Pajak/JKP).
Sixth, pharmaceutical wholesalers with pharmaceutical distribution certificates or pharmaceutical wholesaler licenses and certificates of proper drug distribution methods. Seventh, medical device distributors with medical device distribution certificates or medical device distributor licenses and certificates of proper distribution of medical devices.
Eighth, companies that are directly owned by BUMN with share ownership of more than 50% and whose financial statements are consolidated with the financial statements of the parent BUMN as per generally applicable accounting principles. Share ownership of more than 50% is the percentage of share ownership stated in the previous year’s consolidated financial statements prior to the submission of an application for the confirmation as a low-risk PKP.
PKP that meets the requirements as taxpayers of certain requirements are treated as low-risk PKP without prior issuance of a stipulation decree. Said decree is issued in the event that the preliminary investigation and/or tax crime investigation is not being carried out and the PKP has never been convicted of tax crime within the last five years. In addition to the eight PKPs above, Special Purpose Companies (SPC) or Collective Investment Contract (Kontrak Investasi Kolektif/KIK) in certain KIK schemes may also be designated as low-risk PKP.
The head of the Tax Office may stipulate low-risk PKP ex officio or based on an application. The ex-officio stipulation of entrepreneurs that constitute MITA of Customs or AEO as low-risk PKP is carried out insofar as the data on the stipulation of entrepreneurs as MITA of Customs or AEO is available in the Directorate General of Taxes’ (DGT) database.
The stipulation of low-risk PKP on MITA of Customs or AEO entrepreneurs may be revoked after the DGT receives data from the Directorate General of Customs and Excise (DGCE) concerning the revocation of stipulation decree of MITA of Customs or AEO which is submitted periodically. Manufacturer or producer PKP may apply to be designated as low-risk PKP by attaching a statement letter concerning the existence of a place to carry out production.
Further, Article 6 of PER-04/2021 stipulates that PKP that carry out certain activities and low-risk PKP are given preliminary refunds of VAT overpayment in each tax period. Said certain activities include exports of tangible BKP, supplies of BKP and/or JKP to VAT collectors, supplies of BKP and/or JKP that are not subject to VAT, exports of intangible BKP, and/or exports of JKP.
Preliminary tax refunds may be obtained by submitting applications. Applications for preliminary tax refunds submitted by taxpayers of certain criteria, taxpayers of certain requirements, or low-risk Taxable Persons for VAT Purposes are processed as per the provisions under the Minister of Finance Regulation No. 39/PMK.03/2018. Applications for preliminary tax refunds submitted by taxpayers of certain criteria or low-risk PKP include applications for preliminary tax refunds on tax returns or correction of tax returns in a tax period, a fraction of the tax year, or a tax year.
SPC or KIK as low-risk PKP are eligible for preliminary tax refunds of VAT overpayment in the tax period when real estate is acquired by prior applications. The application is subsequently examined in terms of the stipulation of SPC or KIK, the completeness of the Periodic VAT Returns, the crediting of input VAT on the acquisition of real estate, the accuracy of the completion and calculation of VAT, and the accuracy of VAT payments. On another note, preliminary tax refunds for low-risk PKP may also be given in the event that during the tax period in which preliminary tax refunds are being applied for, there are certain activities.