The government has issued new provisions on certain strategic taxable goods (Barang Kena Pajak/BKP) that are not subject to VAT. The policy is outlined in Government Regulation No. 70 of 2021 concerning Supplies of Certain Strategic Taxable Goods that are Not Subject to VAT (Gov. Reg. 70/2021).

This regulation has been issued with the aim of providing more legal certainty and promoting national development by improving the availability of strategic goods, such as anode slime and gold granules.

Gov. Reg. 70/2021 revises the former regulation, i.e. Gov. Reg. 106/2015. The provisions have been revised as the regulation on the facility of non-collection of VAT on supplies of anode slime and gold granules no longer complies with the development and legal needs of the community.

Article 1 paragraph (1) states that certain strategic BKP on whose supplies VAT is not collected include anode slime and gold granules. Anode slime refers to anode sediment as a by-product or residue from the refining of copper mineral mining commodities, which will be further processed to produce the main product in the form of gold bullion.

Gold granule, on the other hand, refers to gold in the form of granules with the following three criteria:

i.	having a maximum diameter of 7 (seven) millimeters;
ii.	having a purity level of 99.99% based on test results using test methods as per the Indonesian National Standards and/or accredited by the London Bullion Market Association Good Delivery; and
iii.	is the result of production and submitted by the holder of a contract of work, holder of a mining business license, holder of a special mining business license, or holder of a people's mining license to an entrepreneur who will further process it to produce the main products in the form of gold bullion and/or gold jewelry.

Further, input VAT related to the supplies of certain strategic BKP may be credited. However, Taxable Persons for VAT Purposes (Pengusaha Kena Pajak/PKP) entitled to the non-collection of VAT facility that transfer BKP to another party, either partially or wholly, are obliged to pay the uncollected VAT on the acquisition of the certain BKP. The obligation to pay VAT, however, is not enforced in the event that the transfer is carried out under a force majeure.

VAT payments shall be made within a maximum period of one month from the transfer of certain strategic BKP. If at the end of the period, the uncollected VAT has not been paid, the PKP is subject to penalties as per the statutory provisions in the taxation sector. The VAT payable cannot be credited.

Further provisions on the procedures for the granting of the VAT facility and VAT payment of certain strategic BKP whose supplies are eligible for non-collection of VAT and are transferred to other parties shall be further regulated in a Minister of Finance Regulation. The implementation of this Gov. Reg. is subject to an evaluation within a maximum period of 5 years since the regulation comes into force.

The evaluation shall be carried out by a monitoring and evaluation team established by a Minister of Finance Decree. When this Gov. Reg. comes into force, Gov. Reg. 106/2015 shall be declared revoked and invalid. This regulation comes into effect after 30 days from the date of promulgation.

New Regulation on Certain Strategic Taxable Goods Not Subject to VAT