A. Legal Basis

The legal sources underlying these tax guidelines are as follows:

(i)

Law Number 8 of 1983 concerning Value Added Tax on Goods and Services and Sales Tax on Luxury Goods as last amended by Law Number 6 of 2023 (VAT Law);

(ii)

Law Number 7 of 2021 concerning the Harmonisation of Tax Regulations (HPP Law);

(iii)

Minister of Finance Regulation Number 11 of 2025 concerning the Provisions on Alternative Tax Bases and Certain Amount of Value Added Tax (MoF Reg. 11/2025);

(iv)

Minister of Finance Regulation Number 131 of 2024 concerning the Value Added Tax Treatment of Imports of Taxable Goods, Supplies of Taxable Goods, Supplies of Taxable Services, the Utilisation of Intangible Taxable Goods from Outside the Customs Territory within the Customs Territory and the Utilisation of Taxable Services from Outside the Customs Territory within the Customs Territory (MoF Reg. 131/2024);

(v)

Minister of Finance Regulation Number 79 of 2023 concerning Procedures for Valuation for Tax Purposes (MoF Reg. 79/2023);

(vi)

Minister of Finance Regulation No. 121/PMK.03/2015 concerning the Third Amendment to Minister of Finance Regulation No. 75/PMK.03/2010 concerning Alternative Tax Bases (MoF Reg. 121/2015);

(vii)

Minister of Finance Regulation No. 56/PMK.03/2015 concerning the Second Amendment to Minister of Finance Regulation No. 75/PMK.03/2010 concerning Alternative Tax Bases (MoF Reg. 56/2015);

(viii)

Director General of Taxes Regulation Number PER-03/PJ/2022 concerning Tax Invoices (DGT Reg. 03/2022).

(ix)

Director General of Taxes Regulation No. PER-32/PJ/2011 concerning the Amendment to the Director General of Taxes Regulation Number PER-43/PJ/2010 concerning the Application of the Arm's Length Principle to Transactions between Taxpayers and Related Parties (DGT Reg. 32/2011).

B. Background

Assets are all items in the form of economic resources owned by a company and may provide economic benefits in the future. However, under certain conditions, a company may be encouraged to sell its assets.

Several reasons constitute factors for a company to sell its assets. An asset is frequently sold because the asset is no longer used, needs to be replaced with a new one or because the company needs additional sources of funds.

In the taxation aspect, pursuant to the VAT Law, supplies or sales of assets that were originally not for sale will be subject to VAT. Please note that not all supplies or sales of assets will be subject to VAT.

There are provisions on exclusion stipulating the imposition of VAT on assets that were originally not for sale.

C. Definitions

Referring to Article 1A paragraph (1) subparagraph e of the VAT Law, included in the definition of supplies of taxable goods (Barang Kena Pajak/BKP in Indonesia) are taxable goods in the form of inventory and/or assets that according to the original purpose, are not for sale, which are remaining at the time of the dissolution of the company.

Further, Article 1A paragraph (2) of the VAT Law states that not included in supplies of taxable goods are taxable goods that according to the original purpose are not for sale, which are remaining at the time of the dissolution of the company, and that the input VAT on the acquisition is non-creditable.

In this case, it may be concluded that supplies of taxable goods for which input VAT on the acquisition is non-creditable may be excluded from the definition of supplies of taxable goods.

Further, Article 16D of the VAT Law states that VAT is imposed on supplies of taxable goods in the form of assets that according to the original purpose are not for sale by taxable persons (Pengusaha Kena Pajak/PKP in Indonesian), except for supplies of assets on which input VAT is non-creditable.

Included in non-creditable input VAT referred to in Article 9 paragraph (8) subparagraphs b and c is the costs of the acquisition of taxable goods that do not have a direct relationship with business activities and the acquisition and maintenance of motor vehicles in the form of sedans and station wagons unless they are merchandise or rented.

D. Tax Treatment

D.1

VAT Treatment

Referring to Article 16D of the VAT Law, VAT is imposed on taxable goods in the form of assets that according to the original purpose, are not for sale by the taxable persons, except for supplies of assets on which input VAT is non-creditable.

Based on the above explanation, it is evident that the imposition of VAT is focused on supplies of assets in the form of taxable goods, implying that if the supplies are conducted on assets that are not included in taxable goods, their supplies are not liable to VAT. Supplies or sales of taxable goods may be subject to VAT if conducted by taxable persons pursuant to Article 16D of the VAT Law.

Please note that in the event that a taxable person supplies assets that according to the original purpose, are not for sale originating from acquisitions without VAT because they originate from a non-taxable person, when the taxable goods are re-transferred, the supply remains subject to VAT. This is because the 2009 VAT Law does not take into account whether or not there is input VAT paid at the time of asset acquisition.

Further, the VAT Law mentions examples of assets that were originally not for sale by taxable persons, namely supplies of machines, buildings, equipment, furniture or other assets that were originally not for sale.

D.2

Collection, Remittance and Filing

If a taxable person supplies or sells assets that according to the original purpose, are not for sale, the taxable person is required to collect, remit and file VAT.

To calculate VAT payable, the amount of the tax base (Dasar Pengenaan Pajak/DPP in Indonesian) must be ascertained in advance. Pursuant to DGT Reg. 32/PJ/2011, the tax base on a supply of assets that according to the original purpose of not for sale, remaining at the time of the dissolution of the company is the fair market price.

Further, pursuant to MoF Reg. 79/2023, the fair market price is also the value constituting the basis for determining the selling price or consideration in the event that it is influenced by a special relationship. The selling price or consideration is calculated based on the fair market price at the time the taxable goods are supplied.

Referring to the VAT Law, the tax base used to calculate tax payable on a supply of assets that according to the original purpose, are not for sale pursuant to Article 16D of the VAT Law is the amount of the selling price, import value, export value or alternative tax base used as the basis for calculating the tax payable.

Further, with the issuance of MoF Reg. 131/2024 which stipulates the calculation of VAT, VAT can be calculated by multiplying the 12% rate by the alternative tax base. The alternative tax base for calculating VAT is 11/12 multiplied by the import value, selling price or consideration. Therefore, the formula to calculate VAT payable on a supply of an asset that according to the original purpose, is not for sale is as follows:

Further, taxes that have been collected by a taxable person must be remitted to the state treasury. VAT may be remitted through tax payment banks, automated teller machines (ATMs), internet banking or by post. The remittance may be conducted no later than the end of the following month after the taxable period ends.

After the tax is remitted, the taxable person must file VAT that has been collected and remitted to the state treasury. VAT may be filed through coretax. The filing deadline for VAT is no later than the end of the following month after the taxable period ends.

D.3

Tax Invoices

Every taxable person supplying taxable goods and/or taxable services (Jasa Kena Pajak/JKP in Indonesian) is required to collect VAT. Further, the taxable person is required to issue tax invoices as the VAT collection receipt. The provisions on the preparation of tax invoices are described in DGT Reg. 03/2022.

Pursuant to the appendix of DGT Reg. 03/2022, the tax invoice code used to prepare tax invoices for supplies of taxable goods in the form of assets which according to the original purpose, are not for sale is 09.

In the preparation of tax invoices, the tax invoices must be uploaded using the coretax. The deadline for uploading the e-faktur is no later than the 15^th of the following month.

D.4

Exclusion from the VAT Treatment

Pursuant to Article 16D of the VAT Law, there is an exclusion from the sales of assets subject to VAT. This implies that if an asset is included in the exclusion, its supply or sale is not subject to VAT. Generally, this exclusion applies to assets that at the time of acquisition, constitute non-creditable input VAT.

Under Article 9 paragraph (8) of the VAT Law, there are 2 (two) criteria for non-creditable input VAT. These criteria include:

(i)

Input VAT crediting cannot be conducted for the costs of the acquisition of taxable goods that are not directly related to business activities; and

(ii)

Input VAT crediting cannot be conducted for the costs of the acquisition and maintenance of motor vehicles in the form of sedans and station wagons unless they are merchandise or rented.

E. Case Illustration

Case 1

PT Intisa is a company engaged in the pharmaceutical sector. In 2025, PT Intisa plans to replace the computers used by the finance team with new laptops.

Old computers will be sold to other parties constituting the parties that generally purchase used electronics. The computers are sold by PT Intisa for IDR4,000,000/computer. It is known that 10 computers be sold by PT Intisa.

For the transaction, is PT Intisa required to collect VAT on the supply of the assets?

Answer:

Based on the case above, it is known that PT Intisa sells assets that are included in the assets whose main purpose is not to for sale. The assets are in the form of computers used by the finance team in business activities. On this basis, pursuant to Article 16D of the VAT Law, it may be concluded that PT Intisa is required to collect VAT on the supply of the computers.

Pursuant to the HPP Law, the VAT rate applicable in 2023 is 11%, thereby, the VAT calculation is as follows:

Tax Base	=	IDR4,000,000 x 10 computers
	=	IDR40,000,000
VAT payable	=	IDR40,000,000 x 11/12 x 11%
	=	IDR4,400,000

Based on the above calculation, VAT that must be collected by PT Intisa amounts to IDR4,400,000. Further, PT Intisa must issue a tax invoice for the supply of these computers. The tax invoice code used 09.

Further, the tax that has been collected by PT Intisa must be remitted to the state treasury through a bank or post office and filed through the coretax by PT Intisa. The VAT filing and remittance deadline is the end of the following month after the taxable period ends.

Case 2

PT Sinar is a garment industry company of taxable person status. In February 2024, PT Sinar sells a sedan that has been used by the company’s directors. The sedan is sold because it will be replaced with a new vehicle.

For the sale of the sedan, is PT Sinar required to collect VAT on the supply of the asset?

Answer:

Pursuant to Article 9 paragraph (8) of the VAT Law, input VAT at the time of acquisition on the purchase of a sedan is non-creditable, thereby, when this sedan car will be resold, it is not subject to VAT. This is pursuant to Article 16D of the VAT Law which states that one of the requirements for the imposition of VAT on assets that according to the original purpose, are not for sale is that VAT paid at the time of asset acquisition is creditable is not fulfilled.

VAT on Supplies of Assets That According to the Original Purpose, Are Not for Sale