STLGs Borne by the Government Incentives Policy for Certain Motor Vehicles

s Deborah
s Riyhan Juli Asyir
By Deborah, Riyhan Juli Asyir
Deborah
Riyhan Juli Asyir
The government has officially issued a policy related to sales tax on luxury goods (STLGs) on supplies of certain luxury vehicles. This policy is outlined in the Minister of Finance Regulation No. 20/PMK.010/2021 concerning Sales Tax on Luxury Goods on Supplies of Taxable Luxury Goods in the Form of Certain Motor Vehicles Borne by the Government for Fiscal Year 2021 (MoF Reg. 20/2021).
 
This policy is also contained in the Minister of Industry Decree No. 169 of 2021 concerning Motor Vehicles with Sales Tax on Luxury Goods on Supplies of Taxable Luxury Goods Luxury Borne by the Government in Fiscal Year 2021 (Kepmenperin 169/2021). The Minister of Industry Decree 169/2021 is an implementing regulation of MoF Reg. 20/2021 which stipulates the details of certain motor vehicles entitled to STLGs borne by the government incentives.
 
MoF Reg. 20/2021, in general, stipulates STLGs borne by the government incentives for the 2021 fiscal year for supplies of taxable goods (Barang Kena Pajak/BKP) in the form of certain motor vehicles. On another note, several provisions are stipulated with regard to STLGs borne by the government incentives for supplies of these motor vehicles.
 
First, certain types of motor vehicles entitled to STLGs borne by the government incentives. These incentives apply to STLGs payable on supplies of:
  1. sedans or station wagons with ignition or compression ignition combustion engines (diesel or semi-diesel) with a cylinder capacity of up to 1,500 cc; and
  2. motor vehicles for the transport of fewer than 10 people including drivers other than sedans or station wagons, with ignition or compression ignition engines (diesel or semi-diesel) with 1 axle drive system (4 x 2), and a cylinder capacity up to 1,500 cc.
Second, the provision of STLGs incentives for motor vehicles applies if the local purchase requirement is met. The local purchase requirement includes a minimum of 70% of the total fulfillment of domestically-produced components used in motor vehicle production.
 
Third, the amount of STLGs borne by the government incentives for supplies of certain motor vehicles for the 2021 fiscal year. The government-borne STLGs incentives include: (i) 100% of STLGs payable for March 2021 to May 2021 tax periods; (ii) 50% of STLGs payable for June 2021 to August 2021 tax periods; and (ii) 25% of STLGs payable for September 2021 to December 2021 tax periods.
 
Fourth, the obligation of taxable persons for VAT purposes (Pengusaha Kena Pajak/PKP) that supply certain luxury motor vehicles and may take advantage of these incentives. Said obligation constitutes preparing tax invoices and reports on the realization of STLGs borne by the government.
 
Fifth, the authority of the head of the Tax Office (Kantor Pelayanan Pajak/KPP) on behalf of the Director General of Taxes to collect outstanding STLGs. The head of KPP’s authority to collect may be exercised if certain obtained data/information shows that (i) the supplied luxury BKP do not match the category, requirements, or the local purchase requirement as regulated in a ministerial decree in charge of industrial affairs; (ii) STLGs borne by the government do not comply with the provisions and/or; (iii) the taxable person for VAT purposes does not fulfill his obligation.
 
The implementation and accountability of government-borne tax subsidy spending in this regulation are carried out as per statutory provisions. The provisions under MoF Reg. 20/2021 have come into effect as of the promulgation date on 25 February 2021.
 
Next, Kepmenperin 169/2021 stipulates details of motor vehicles entitled to STLGs borne by the government incentives. The types of motor vehicles entitled to STLGs borne by the government incentives are listed in appendix I of the Kepmenperin 169/2021.
 
In line with MoF Reg. 20/2021, Kepmenperin 169/2021 also states that motor vehicles entitled to these incentives must meet the local purchase requirement of a minimum of 70%. The local purchase requirement includes fulfilling the total use of domestically-produced components utilized in motor vehicle production.
 
With regard to the local purchase requirement, industrial companies are required to submit a local purchase plan, a statement letter on the utilization of local purchase in production to the Director General of Metal, Machinery, Means of Transportation, and Electronics Industries (Industri Logam, Mesin, Alat Transportasi, dan Elektronika/ILMATE). The format of a statement letter on the utilization of local purchase in production and the format of the local purchase plan are listed in Appendix II and Appendix III of Kepmenperin 169/2021. On another note, industrial companies are required to file tax invoices, reports on the realization of STLGs borne by the government, and quarterly sales performance to the Director General of ILMATE.
 
In terms of the process of monitoring and evaluation of the realization of the local purchase plan, the Director General of ILMATE shall cooperate with agencies in the taxation sector and/or involve an independent verification agency. If during the monitoring and evaluation, some industrial companies are found not to perform local purchases, the Director General of ILMATE may propose administrative penalties and delete the motor vehicles from Appendix I of Kepmenperin 169/2021.
 
All provisions under Kepmenperin 169/2021 shall take effect from 26 February 2021 until the STLGs borne by the government incentives period ends.
The government has officially issued a policy related to sales tax on luxury goods (STLGs) on supplies of certain luxury vehicles. This policy is outlined in the Minister of Finance Regulation No. 20/PMK.010/2021 concerning Sales Tax on Luxury Goods on Supplies of Taxable Luxury Goods in the Form of Certain Motor Vehicles Borne by the Government for Fiscal Year 2021 (MoF Reg. 20/2021).
 
This policy is also contained in the Minister of Industry Decree No. 169 of 2021 concerning Motor Vehicles with Sales Tax on Luxury Goods on Supplies of Taxable Luxury Goods Luxury Borne by the Government in Fiscal Year 2021 (Kepmenperin 169/2021). The Minister of Industry Decree 169/2021 is an implementing regulation of MoF Reg. 20/2021 which stipulates the details of certain motor vehicles entitled to STLGs borne by the government incentives.
 
MoF Reg. 20/2021, in general, stipulates STLGs borne by the government incentives for the 2021 fiscal year for supplies of taxable goods (Barang Kena Pajak/BKP) in the form of certain motor vehicles. On another note, several provisions are stipulated with regard to STLGs borne by the government incentives for supplies of these motor vehicles.
 
First, certain types of motor vehicles entitled to STLGs borne by the government incentives. These incentives apply to STLGs payable on supplies of:
  1. sedans or station wagons with ignition or compression ignition combustion engines (diesel or semi-diesel) with a cylinder capacity of up to 1,500 cc; and
  2. motor vehicles for the transport of fewer than 10 people including drivers other than sedans or station wagons, with ignition or compression ignition engines (diesel or semi-diesel) with 1 axle drive system (4 x 2), and a cylinder capacity up to 1,500 cc.
Second, the provision of STLGs incentives for motor vehicles applies if the local purchase requirement is met. The local purchase requirement includes a minimum of 70% of the total fulfillment of domestically-produced components used in motor vehicle production.
 
Third, the amount of STLGs borne by the government incentives for supplies of certain motor vehicles for the 2021 fiscal year. The government-borne STLGs incentives include: (i) 100% of STLGs payable for March 2021 to May 2021 tax periods; (ii) 50% of STLGs payable for June 2021 to August 2021 tax periods; and (ii) 25% of STLGs payable for September 2021 to December 2021 tax periods.
 
Fourth, the obligation of taxable persons for VAT purposes (Pengusaha Kena Pajak/PKP) that supply certain luxury motor vehicles and may take advantage of these incentives. Said obligation constitutes preparing tax invoices and reports on the realization of STLGs borne by the government.
 
Fifth, the authority of the head of the Tax Office (Kantor Pelayanan Pajak/KPP) on behalf of the Director General of Taxes to collect outstanding STLGs. The head of KPP’s authority to collect may be exercised if certain obtained data/information shows that (i) the supplied luxury BKP do not match the category, requirements, or the local purchase requirement as regulated in a ministerial decree in charge of industrial affairs; (ii) STLGs borne by the government do not comply with the provisions and/or; (iii) the taxable person for VAT purposes does not fulfill his obligation.
 
The implementation and accountability of government-borne tax subsidy spending in this regulation are carried out as per statutory provisions. The provisions under MoF Reg. 20/2021 have come into effect as of the promulgation date on 25 February 2021.
 
Next, Kepmenperin 169/2021 stipulates details of motor vehicles entitled to STLGs borne by the government incentives. The types of motor vehicles entitled to STLGs borne by the government incentives are listed in appendix I of the Kepmenperin 169/2021.
 
In line with MoF Reg. 20/2021, Kepmenperin 169/2021 also states that motor vehicles entitled to these incentives must meet the local purchase requirement of a minimum of 70%. The local purchase requirement includes fulfilling the total use of domestically-produced components utilized in motor vehicle production.
 
With regard to the local purchase requirement, industrial companies are required to submit a local purchase plan, a statement letter on the utilization of local purchase in production to the Director General of Metal, Machinery, Means of Transportation, and Electronics Industries (Industri Logam, Mesin, Alat Transportasi, dan Elektronika/ILMATE). The format of a statement letter on the utilization of local purchase in production and the format of the local purchase plan are listed in Appendix II and Appendix III of Kepmenperin 169/2021. On another note, industrial companies are required to file tax invoices, reports on the realization of STLGs borne by the government, and quarterly sales performance to the Director General of ILMATE.
 
In terms of the process of monitoring and evaluation of the realization of the local purchase plan, the Director General of ILMATE shall cooperate with agencies in the taxation sector and/or involve an independent verification agency. If during the monitoring and evaluation, some industrial companies are found not to perform local purchases, the Director General of ILMATE may propose administrative penalties and delete the motor vehicles from Appendix I of Kepmenperin 169/2021.
 
All provisions under Kepmenperin 169/2021 shall take effect from 26 February 2021 until the STLGs borne by the government incentives period ends.