Director General of Taxes Circular Number: SE-09/PJ.51/2003

 

 

 

 

 

 

In respect of places of activities that solely purchase or collect raw materials, the following matters are, hereby, conveyed:

1.

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 18 of 2000, among others. stipulates that:

 

a.

Article 1 number 12

 

 

Trade is any business activity of purchasing and selling, including barter, without changing the form and nature.

 

b.

Article 1 number 14

 

 

Entrepreneur is any individual or entity in whatever form that in the course of business or work produces goods, imports goods, exports goods, conducts trading business, utilises intangible goods from outside the Customs Territory, conducts service businesses or utilises services from outside the Customs Territory.

 

c.

Article 1 number 16

 

 

Producing is the activity of processing through changing the shape and/or the nature of goods from the original form into new goods or having new usability or the activity of processing natural resources, including instructing other individuals or other entities to conduct such an activity.

 

d.

Article 1A paragraph (1) subparagraph f

 

 

Included in the definition of supplies of Taxable Goods are supplies of Taxable Goods from the head office to branches or vice versa and/or supplies of Taxable Goods between branches. On the other hand, the elucidation of this Article outlines that in the event that a company has more than one place where taxes are payable, either as the head office or as a branch of the company, transfers of Taxable Goods between those places constitute supplies of Taxable Goods.

2.

Based on the above provisions, a place of activity that solely purchases or collects raw materials does not need to be registered as a Taxable Person if:

 

a.

the place is used by the Taxable Person to purchase or collect Taxable Goods (in this case, raw materials) to maintain the availability of raw materials needed in the Taxable Person’s production activities at the place of business (factory); and

 

b.

solely supplies the purchased or collected raw materials to the place of business (factory) and does not supply to other parties; and

 

c.

does not conduct business as referred to in point 1 letter b above.

 

 

 

This is to be taken into account and disseminated accordingly in your respective working areas.

 

 

 

19 February 2003

DIRECTOR GENERAL,

signed

HADI POERNOMO