Sufficiently clear.

 

There are no relevant regulations.

Subparagraph a

“Agreement” includes buying and selling, exchanging, buying and selling in installments or other agreements that result in a supply of rights to goods.

Subparagraph b

A supply of Taxable Goods may occur due to a lease purchase agreement and/or a leasing agreement.

 

“Transfers of Taxable Goods due to a leasing agreement” refers to a supply of Taxable Goods due to a financial lease.

 

In the event that a supply of Taxable Goods by the Taxable Person is in the context of a financial lease, the Taxable Goods are deemed supplied directly from the supplier Taxable Person to the lessee.

Subparagraph c

“Intermediary traders” refer to individuals or entities that in their course of business or work under their own names enter into agreements or engagements on and for other persons’ behalf earning certain wages or remunerations, for example, commissioners.

 

“Auctioneers" refer to auctioneers of the Government or those appointed by the Government.

Subparagraph d

“Personal use” refers to the use for the self-interest of an entrepreneur, management or employees, either self-produced or non-self-produced goods.

 

“Free of charge” refers to provision without payment of, either self-produced goods or non-self-produced goods, such as product samples given for promotion to relatives or buyers.

Subparagraph e

Taxable Goods in the form of inventories and/or assets that, according to their original purpose, are not for sale and are remaining at the company’s dissolution are equivalent to personal use, thereby, deemed a supply of Taxable Goods.

 

Excluded from the provisions under subparagraph e are supplies referred to in Article 1A paragraph (2) subparagraph e.

Subparagraph f

In the event that a company has more than one place of supply, either as the head office or as a branch of the company, transfers of Taxable Goods between those places constitute supplies of Taxable Goods.

 

“Head office” refers to the residence or domicile.

 

“Branch” refers to, among others, the business location, representatives, marketing units and places of similar business activities.

Subparagraph g

Deleted.

Subparagraph h

Example:

In a murabaha transaction, the sharia bank acts as a provider of funds to purchase a motor vehicle from a Taxable Person A at the order of a sharia bank customer (Mr. B). Although based on sharia principles, sharia banks must first purchase the motor vehicle and then sell it to Mr. B, based on this Law, the supply of the motor vehicle is deemed to be carried out directly by the Taxable Person A to Mr. B.

Subparagraph a

“Broker” refers to brokers as referred to in the Indonesian Commercial Code, namely intermediary traders appointed by the President or by an official declared authorised by the President for that purpose. They run their companies by doing work for a certain wage or provision, on the mandate of and on behalf of other people with whom they have no employment relationship.

Subparagraph b

Sufficiently clear.

Subparagraph c

In the event that a Taxable Person has more than one place of business, either as the head office or company branch, and the Taxable Person has submitted written notification to the Director General of Taxes, transfers of Taxable Goods from one place of business to another place of business (the head office to a branch or vice versa or between branches) is deemed not included in the definition of a supply of Taxable Goods, except for transfers of Taxable Goods between places of supply.

Subparagraph d

“Split-up” refers to the separation of businesses as referred to in the Law stipulating limited liability companies.

 

Transfers of Taxable Goods in the context of a merger, consolidation, spin-off, split-up and acquisition as well as transfers of Taxable Goods for the purpose of paid-up capital, which are carried out by:

a.	a Taxable Person to another Taxable Person are not included in the definition of supplies of Taxable Goods, therefore, no Value Added Tax is payable;
b.	an Entrepreneur that has not been or is not registered as a Taxable Person are included in the definition of supplies of Taxable Goods, therefore, there is Value Added Tax payable but not collected by the entrepreneur because the entrepreneur has not been or is not registered as a Taxable Person; or
c.	a Taxable Person to an entrepreneur that has not been or is not registered as a Taxable Person are included in the definition of supplies of Taxable Goods, therefore, there is Value Added Tax payable that must be collected by the Taxable Person. In the event that the transferred Taxable Goods are in the form of assets that, according to their original purpose are not for sale, Value Added Tax shall be imposed on the transfer of those Taxable Goods pursuant to the provisions on supplies of Taxable Goods in the form of assets that, according to their original purpose, are not for sale.

Subparagraph e

Taxable Goods in the form of assets that, according to their original purpose are not for sale and are remaining at the dissolution of the company, for which Input VAT on acquisitions is non-creditable because they do not have a direct relationship with the business as referred to in Article 9 paragraph (8) subparagraph b and/or assets in the form of motor vehicles, sedans and station wagons for which Input VAT on acquisitions is non-creditable as referred to in Article 9 paragraph (8) subparagraph c are not included in the definition of supplies of Taxable Goods.

 

There are no relevant regulations.

The effect of a special relationship as referred to in this Law is the possibility of a price being set lower than the market price. In this case, the Director General of Taxes is authorised to adjust the Selling Price or Remuneration constituting the Tax Base to the fair market price applicable in the free market. The effect of a special relationship as referred to in this Law is the possibility of a price being set lower than the market price. In this case, the Director General of Taxes is authorised to adjust the Selling Price or Remuneration constituting the Tax Base to the fair market price applicable in the free market.

The special relationship between a Taxable Person and the party receiving a supply of Taxable Goods and/or Taxable Services may occur due to dependence or linkage with one another due to:

-	invoice of ownership or participation;
-	control through management or the use of technologies.

 

In addition to the abovementioned matter, a special relationship between individuals may also occur due to a blood relationship or marriage.

a.	A special relationship is deemed to exist if there is an ownership relationship in the form of capital participation of 25% (twenty-five per cent) or more, either direct or indirect.   Example: If PT. A holds 50% (fifty per cent) of PT. B’s shares, share ownership by PT. A constitutes direct participation. Further, if PT. B holds 50% (fifty per cent) of PT. C’s shares, PT. A as a shareholder of PT. B indirectly has participation in PT. C by 25% (twenty-five per cent). In such a case, PT. A, PT. B, and PT. C are considered to be related. If PT. A also holds 25% (twenty-five per cent) of PT. D’s shares, PT. B, PT. C and PT. D are considered to be affiliated. The abovementioned ownership relationship may also occur between individuals and entities.
b.	The relationship between entrepreneurs as described in subparagraph a may also occur due to control through management or the use of technologies, even though there is no ownership relationship.   A special relationship is deemed to exist if one or more companies are under the control of the same entrepreneur. Similarly, the relationship between several companies that are under the control of the same entrepreneur.
c.	Family relationship by blood in a vertical lineage of one degree refers to father, mother and children, whereas family relationship by blood in a horizontal lineage of one degree refers to siblings.   Family relationship by marriage in a vertical lineage of one degree refers to parents-in-law and stepchildren, whereas family relationship by marriage in a horizontal lineage of one degree refers to siblings-in-law.   If a husband and wife have an income and asset separation agreement, the relationship between the husband and wife is included in the definition of a special relationship pursuant to this Law.

 

There are no relevant regulations.

The provisions under Article 3 on Value Added Tax Registration are deleted and transferred to Law concerning General Provisions and Tax Procedures.

 

There are no relevant regulations.

Entrepreneurs conducting supplies of Taxable Goods and/or supplies of Taxable Services within the Customs Territory and/or exports of Tangible Taxable Goods, exports of Taxable Services and/or exports of Intangible Taxable Goods are required to:

a.	report their business to be registered as Taxable Persons;
b.	collect tax payable;
c.	remit Value Added Tax payable in the event that the Output VAT is greater than the creditable Input VAT and remit Sales Tax on Luxury Goods payable; and
d.	file tax calculations.

 

The above obligations do not apply to small-scale entrepreneurs whose threshold is stipulated by the Minister of Finance.

Sufficiently clear.

Small-scale entrepreneurs are allowed to choose to be registered as Taxable Persons. If a small-scale entrepreneur chooses to become a Taxable Person, this Law fully applies to the small-scale entrepreneur.

Value Added Tax payable on utilisation of Intangible Taxable Goods and/or utilisation of Taxable Services from outside the Customs Territory must be collected by the individual or entity that utilises the Intangible Taxable Goods and/or Taxable Services.

 

There are no relevant regulations.

Subparagraph a

Entrepreneurs conducting supplies of Taxable Goods include both entrepreneurs that have been registered as Taxable Persons as referred to in Article 3A paragraph (1) and entrepreneurs that should be registered as Taxable Persons but have not been registered.

 

Taxable supplies of goods must fulfil the following requirements:

a.	the supplied tangible goods constitute Taxable Goods;
b.	the supplied intangible goods constitute Intangible Taxable Goods;
c.	the supplies are carried out within the Customs Territory; and
d.	the supplies are carried out in the context of business or work.

Subparagraph b

Taxes are also collected upon imports of Taxable Goods. Collection is carried out through the Directorate General of Customs and Excise.

 

Different from supplies of Taxable Goods under subparagraph a, any persons entering Taxable Goods into the Customs Territory, regardless of whether carried out in the context of their business or work or not, remain subject to tax.

Subparagraph c

Entrepreneurs conducting supplies of Taxable Services include both entrepreneurs that have been registered as Taxable Persons as referred to in Article 3A paragraph (1) and entrepreneurs that should be registered as Taxable Persons but have not been registered.

 

Taxable supplies of services must fulfil the following requirements:

a.	the supplied services constitute Taxable Services;
b.	the supplies are carried out within the Customs Territory; and
c.	the supplies are carried out in the course of business or work.

 

Included in the definition of supplies of Taxable Services are Taxable Services utilise for personal interest and/or provided free of charge.

Subparagraph d

To provide the same tax treatment as imports of Taxable Goods, Intangible Taxable Goods originating from outside the Customs Territory utilised by anyone within the Customs Territory are also subject to Value Added Tax.

 

Example:

Entrepreneur A who is domiciled in Jakarta has the right to use the brand owned by Entrepreneur B who is domiciled in Hong Kong. For the utilisation of the brand by Entrepreneur A in the Customs Territory, Value Added Tax is payable.

Subparagraph e

Services originating from outside the Customs Territory utilised by any persons within the Customs Territory are subject to Value Added Tax.

 

For example, a Taxable Person C in Surabaya utilises Taxable Services from Entrepreneur B who is domiciled in Singapore. For the utilisation of the said Taxable Services, Value Added Tax is payable.

Subparagraph f

Different from entrepreneurs conducting the activities referred to in subparagraph a and/or subparagraph c, entrepreneurs exporting Tangible Taxable Goods shall only be entrepreneurs that have been registered as Taxable Persons as referred to in Article 3A paragraph (1).

Subparagraph g

Similar to exports of Tangible Taxable Goods, entrepreneurs exporting Intangible Taxable Goods shall only be entrepreneurs that have been registered as Taxable Persons as referred to in Article 3A paragraph (1).

 

“Intangible Taxable Goods” refer to:

1.	use or right to use copyright in the fields of literature, arts or scientific works, patents, designs or models, plans, secret formulas or processes, trademarks or other forms of intellectual/industrial property rights or similar rights;
2.	use or right to use industrial, commercial or scientific tools/equipment;
3.	provision of knowledge or information in the scientific, technical, industrial or commercial sectors;
4.	provision of additional or complementary assistance in relation to the use or right to use the rights in number 1, the use or the right to use industrial tools/equipment in number 2 or the provision of knowledge or information in number 3, in the form of:
	a)	receipt or the right to receive image or sound recordings or both, which are distributed to the public via satellites, cables, fiber optic or similar technologies;
	b)	use or right to use images or sound recordings or both, for television or radio broadcasts broadcast/transmitted via satellites, cables, fiber optic or similar technologies; and
	c)	use or right to use part or all radio communication spectrum;
5.	use or right to use motion picture films, films or videotapes for television broadcasts or sound tapes for radio broadcasts; and
6.	relinquishing of all or part of the rights relating to the use or granting of intellectual/industrial property rights or other rights as mentioned above.

Subparagraph h

Included in the definition of exports of Taxable Services are supplies of Taxable Services from within the Customs Territory to outside the Customs Territory by Taxable Persons that produce and export Tangible Taxable Goods based on orders or demand with materials and instructions from buyers outside the Customs Territory.

Sufficiently clear.

 

There are no relevant regulations.

1.	a balance in the tax burden between low-income consumers and high-income consumers is necessary;
2.	control over the consumption patterns of Taxable Luxury Goods is necessary;
3.	protection of small-scale or traditional producers is necessary; and
4.	securing state revenues is necessary.

 

1.	goods that do not constitute basic necessities;
2.	goods that are consumed by certain people;
3.	goods that are generally consumed by high-income people; and/or
4.	goods that are consumed to show status.

 

The imposition of Sales Tax on Luxury Goods on imports of Taxable Luxury Goods neither takes into account the importer of the Taxable Goods nor takes into account whether the imports are carried out continuously or only once.

 

In addition, the imposition of Sales Tax on Luxury Goods on a supply of Taxable Luxury Goods does not take into account whether a part of the Taxable Goods has been subject to or not subject to Sales Tax on Luxury Goods in the previous transaction.

 

a.	assembling, namely combining loose parts of an item into semi-finished goods or finished goods, such as assembling cars, electronic goods and household furniture;
b.	cooking, namely processing goods by heating, whether mixed with other ingredients or not;
c.	mixing, namely uniting two or more elements (substances) to produce one or more other goods;
d.	packaging, namely placing goods into an object to protect it from damage and/or to improve its marketing; and
e.	bottling, namely putting beverages or liquids into bottles that are closed in certain methods;
and other activities that are equivalent to these activities or instructing other people or entities to carry out such activities.

The general definition of Input VAT only applies to Value Added Tax and is not known in Sales Tax on Luxury Goods. Therefore, Sales Tax on Luxury Goods that has been paid cannot be credited against Sales Tax on Luxury Goods payable.

 

a.	the supply by the manufacturer or producer of the Taxable Luxury Goods; or
b.	the import of Taxable Luxury Goods.

 

There are no relevant regulations.

In the event that supplied Taxable Goods are returned by the buyer, Value Added Tax and Sales Tax on Luxury Goods on the returned Taxable Goods shall reduce the Output VAT and Sales Tax on Luxury Goods payable by the seller Taxable Persons and reduce:

a.	Input VAT from the buyer Taxable Person, in the event that the Input VAT on the returned Taxable Goods has been credited;
b.	expenses or assets for the buyer Taxable Person, in the event that the tax on the returned Taxable Goods is not credited and has been charged as an expense or has been capitalise in the acquisition prices of the said assets; or
c.	expenses or assets for buyers that do not constitute Taxable Persons in the event that the tax on the returned Taxable Goods has been charged as an expense or has been capitalise in the acquisition prices of the said assets.

a.	Input VAT from the Taxable Person receiving the Taxable Services, in the event that the Input VAT on the cancelled Taxable Services has been credited;
b.	expenses or assets for the Taxable Person receiving the Taxable Services, in the event that Value Added Tax on the cancelled Taxable Services is not credited and has been charged as an expense or has been capitalise in acquisitions price of the said assets; or
c.	expenses or assets for the recipient of Taxable Services that does not constitute a Taxable Person in the event that Value Added Tax on the cancelled Taxable Services has been charged as an expense or capitalise in the acquisition prices of the said assets.

Sufficiently clear.

 

There are no relevant regulations.

Sufficiently clear.

 

There are no relevant regulations.

Sufficiently clear.

Value Added Tax is imposed on the consumption of Taxable Goods and/or Taxable Services within the Customs Territory. Therefore, exports of Taxable Goods and/or Taxable Services for consumption outside the Customs Territory are subject to Value Added Tax at a rate of 0% (zero per cent).

 

The imposition of the 0% (zero per cent) rate does not imply exemption from Value Added Tax. Thereby, the Input VAT that has been paid for acquisitions of Taxable Goods and/or Taxable Services related to these activities is creditable.

Based on considerations of economic development and/or increased need for funds for development, the Value Added Tax rate may be changed to a minimum of 5% (five per cent) and a maximum of 15% (fifteen per cent).

“House of Representatives of the Republic of Indonesia” refers to complementary organs of the House of Representatives of the Republic of Indonesia, namely a commission whose duties and authorities are in the finance, banking and development planning sectors.

 

There are no relevant regulations.

Sales Tax on Luxury Goods rates may be stipulated in several rate groups, namely the lowest rate of 10% (ten per cent) and the highest rate of 200% (two hundred per cent). The difference in the rate groups is based on the classification of Taxable Luxury Goods subject to Sales Tax on Luxury Goods as referred to in Article 5 paragraph (1).

Sales Tax on Luxury Goods is a tax imposed on the consumption of Taxable Luxury Goods within the Customs Territory. Therefore, Taxable Luxury Goods that are exported or consumed outside the Customs Territory are subject to Sales Tax on Luxury Goods at a rate of 0% (zero per cent). Sales Tax on Luxury Goods that has been paid for acquisitions of the exported Taxable Luxury Goods may be refunded.

Referring to the considerations outlined in the elucidation of Article 5 paragraph (1), the classification of goods subject to Sales Tax on Luxury Goods is mainly based on the ability to pay of different groups of people using the goods, in addition to being based on their use value  for society in general. In this regard, high rates shall be imposed on goods that are only consumed by high-income people. In the event that goods consumed by the public need to be subject to Sales Tax on Luxury Goods, the applied rates shall be the low rates. Goods subject to Sales Tax on Luxury Goods are classified after consulting with the complementary organs of the House of Representatives in charge of the finance sector.

Sufficiently clear.

 

There are no relevant regulations.

Example:

a.	The imposition of the 12% (twelve per cent) rate
	Taxable Person A sells Taxable Goods in cash at a Selling Price of IDR10,000,000.00 (ten million rupiah). Value Added Tax payable = 12% x IDR10,000,000.00 = IDR1,200,000,000.00. The Value Added Tax of IDR1,200,000.00 (one million and two hundred thousand rupiah) constitutes Output VAT collected by Taxable Person A.
b.	The imposition of the 12% (twelve per cent) rate
	A person imports certain Taxable Goods that are subject to the 12% (twelve per cent) rate with an Import Value of IDR10,000,000.00 (ten million rupiah). Value Added Tax collected through the Directorate General of Customs and Excise = 12% x IDR10,000,000.00 = IDR1,200,000.00.
c.	The imposition of the 0% (zero per cent) rate
	Taxable Person D exports Taxable Goods with an Export Value of IDR10,000,000.00 (ten million rupiah). Value Added Tax payable = 0% x IDR10,000,000.00 = IDR0.00. The Value Added Tax of IDR0.00 (zero rupiah) constitutes the Output VAT.

Deleted.

Sufficiently clear.

 

There are no relevant regulations.

Deleted.

Buyers of Taxable Goods, recipients of Taxable Services, importers of Taxable Goods, parties utilising Intangible Taxable Goods from outside the Customs Territory or parties utilising Taxable Services from outside the Customs Territory are required to pay Value Added Tax and are entitled to receive withholding receipts. Value Added Tax that should have been paid constitutes Input VAT for buyers of Taxable Goods, recipients of Taxable Services, importers of Taxable Goods, parties utilising Intangible Taxable Goods from outside the Customs Territory within the Customs Territory or parties utilising Taxable Services from outside the Customs Territory within the Customs Territory, having the status of Taxable Persons. Input VAT that must be paid by Taxable Persons may be credited against the Output VAT they collect in the same Taxable Period.

Sufficiently clear.

To credit Input VAT, Taxable Persons shall use Tax Invoices that fulfil the requirements referred to in Article 13 paragraph (5).

 

In addition, to credit Input VAT, the requirements of formal and material correctness as referred to in Article 13 paragraph (9) must also be fulfilled.

Sufficiently clear.

Input VAT referred to in this paragraph is creditable Input VAT.

 

In a Taxable Period, creditable Input VAT may be greater than the Output VAT. The Input VAT overpayment cannot be refunded in the Taxable Period concerned but is carried forward to the next Taxable Period.

 

Example:

The Input VAT overpayment in a Taxable Period in accordance with the provisions in paragraph (4) is carried forward to the next Taxable Period.

 

However, if the Input VAT overpayment occurs in a Taxable Period at the end of an accounting year, applications for refunds of the Input VAT overpayment may be submitted.

 

Included in the definition of the end of an accounting year in this provision is the Taxable Period when the Taxpayer carries out business termination (dissolution).

Sufficiently clear.

Sufficiently clear.

Deleted.

To reduce the abuse of the granting of accelerating tax refund facility, the Director General of Taxes may conduct an audit after granting preliminary tax refunds.

In the event that the Director General of Taxes, after conducting the audit, issues a Notice of Tax Underpayment Assessment, the surcharge penalty as referred to in Article 17C paragraph (5) of Law Number 6 of 1983 concerning General Provisions and Tax Procedures and the amendments thereto shall not be applied even though at the previous stage, a Preliminary Tax Refunds Decision Letter has been issued.

 

On the other hand, administrative penalties are imposed pursuant to Article 13 paragraph (2) of Law Number 6 of 1983 concerning General Provisions and Tax Procedures and the amendments thereto.

 

If in the said audit indications of tax crime are found, this provision shall not apply.

“Taxable supplies” refer to supplies of goods or services that pursuant to the provisions in this Law are subject to Value Added Tax. There are two Input VAT treatments for taxable supplies, namely creditable or non-creditable.

 

“Non-taxable supplies” refer to supplies of goods and services that are not subject to Value Added Tax as referred to in Article 4A and which are exempt from Value Added Tax as referred to in Article 16B. Input VAT on non-taxable supplies is non-creditable.

 

Taxable Persons that in a Taxable Period perform taxable supplies and the Input VAT is creditable, taxable supplies for which the Input VAT is non-creditable and non-taxable supplies, may only credit Input VAT in respect of taxable supplies and Input VAT is creditable. The fraction of the taxable supplies must be ascertained from the Taxable Persons’ bookkeeping.

 

Example:

A Taxable Person performs several types of supplies, as follows:

a.	taxable supplies and the Input VAT with a selling price of IDR25,000,000.00 (twenty-five million rupiah) may be credited against the Output VAT of IDR3,000,000.00 (three million rupiah) under the assumption of the imposition of a normal rate of 12% (twelve per cent);
b.	taxable supplies and the Input VAT with a selling price of IDR20,000,000.00 (twenty million rupiah) may not be credited against the Output VAT of IDR400,000.00 (four hundred thousand rupiah) under the assumption of the imposition of a final rate of 2% (two per cent);
c.	supplies not subject to Value Added Tax of IDR5,000,000.00 (five million rupiah) without collecting the Output VAT.

 

The amount of Output VAT to be collected is IDR3,400,000.00 (three million and four hundred thousand rupiah).

 

Input VAT to be paid on acquisitions of:

a.	Taxable Goods and/or Taxable Services in respect of taxable supplies and creditable Input VAT amount to IDR1,500,000.00 (one million and five hundred thousand rupiah);
b.	Taxable Goods and/or Taxable Services in respect of taxable supplies and non-creditable Input VAT amount to IDR1,000,000.00 (one million rupiah);
c.	Taxable Goods and Taxable Services in respect of non-taxable supplies amount to IDR300,000.00 (three hundred thousand rupiah).

 

The amount of paid Input VAT is IDR2,800,000.00 (two million and eight hundred thousand rupiah).

 

Pursuant to this provision, the Input VAT that may be credited against Output VAT of IDR3,400,000.00 only amounts to IDR1,500,000.00 which originates from the Input VAT on the acquisition of Taxable Goods and/or Taxable Services in respect of taxable supplies.

In the event that Input VAT for taxable supplies and the creditable Input VAT cannot be ascertained, the method of Input VAT crediting is calculated based on the Input VAT crediting guidelines, which are intended to provide convenience and certainty to Taxable Persons.

 

Example:

A Taxable Person performs 3 (three) types of supplies, as follows

a.	taxable supplies and the Input VAT amounts to IDR35,000,000.00 (thirty-five million rupiah) may be credited against the Output VAT of IDR4,200,000.00 (four million and two hundred thousand rupiah) under the assumption of the imposition of a normal rate of 12% (twelve per cent);
b.	taxable supplies and the Input VAT amount to IDR20,000,000.00 (twenty million rupiah) cannot be credited against the Output VAT of IDR400,000.00 (four hundred thousand rupiah) under the assumption of the imposition of a final rate of 2% (two per cent);
c.	non-taxable supplies of IDR15,000,000.00 (fifteen million rupiah) without collecting Output VAT.

 

The amount of Output VAT to be collected is IDR4,600,000.00 (four million and six hundred thousand rupiah).

 

Input VAT paid for the acquisition of Taxable Goods and/or Taxable Services in respect of the entire supply amounts to IDR2,500,000.00 (two million and five hundred thousand rupiah), whereas the Input VAT in respect of taxable supplies and the creditable Input VAT cannot be ascertained. Pursuant to this provision, the Input VAT of IDR2,500,000.00 (two million and five hundred thousand rupiahs) cannot be credited entirely against the Output VAT of IDR4,600,000.00 (four million and six hundred thousand rupiah).

 

The amount of creditable Input VAT is calculated based on the guidelines for Input VAT crediting.

Sufficiently clear.

Deleted.

Sufficiently clear.

Sufficiently clear.

Sufficiently clear.

Sufficiently clear.

Sufficiently clear.

Deleted.

Deleted.

Deleted.

Input VAT is, basically, creditable against Output VAT. However, for costs referred to in this paragraph, Input VAT is non-creditable.

Subparagraph a

Deleted.

Subparagraph b

Costs directly related to business activities are costs for production, distribution, marketing and management activities.

 

This provision applies to all business sectors. To be creditable, Input VAT must also fulfil the requirement that the cost relates to the existence of supplies subject to Value Added Tax. Therefore, even though a cost has fulfilled the requirement of a direct relationship with business, Input VAT may be non-creditable, namely if the cost is not related to the supplies subject to Value Added Tax.

Subparagraph c

Deleted.

Subparagraph d

Deleted.

Subparagraph e

Deleted.

Subparagraph f

Sufficiently clear.

Subparagraph g

Sufficiently clear.

Subparagraph h

Deleted.

Subparagraph i

Deleted.

Subparagraph j

Deleted.

Paragraph (9)

Sufficiently clear.

Paragraph (9a)

Sufficiently clear.

Paragraph (9b)

Sufficiently clear.

Paragraph (9c)

Sufficiently clear.

Sufficiently clear.

 

There are no relevant regulations.

To provide convenience and simplification of tax administration as well as a sense of justice, the Minister of Finance may determine the amount of Value Added Tax collected and remitted by:

a.	Taxable Persons whose business turnover in 1 (one) accounting year does not exceed a certain threshold;
b.	Taxable Persons conducting certain businesses, among others:
	1.	those experiencing difficulties in administering Input VAT;
	2.	those conducting transactions through third parties, both supplies of Taxable Goods and/or Taxable Services and the payments; or
	3.	those having complexities of business processes, thereby, imposition of Value Added Tax using normal mechanisms is not possible,
	and/or
c.	Taxable Persons performing supplies of certain Taxable Goods and/or certain Taxable Services.
	“Certain Taxable Goods and/or certain Taxable Services” are:
	1.	Taxable Goods and/or Taxable Services subject to Value Added Tax in the context of expanding the tax base; and
	2.	Taxable Goods that constitute essential goods.

Sufficiently clear.

 

There are no relevant regulations.

Sales Tax on Luxury Goods payable is calculated by multiplying the Selling Price, Import Value, Export Value or Other Values stipulated by the Minister of Finance Decree by the tax rates stipulated in Article 8.

Different from the Value Added Tax collected at each level of a supply, Sales Tax on Luxury Goods is only collected at the supply level by Taxable Persons producing Taxable Luxury Goods or upon an import of Taxable Luxury Goods. Thus, Sales Tax on Luxury Goods does not constitute Input VAT, thereby, is non-creditable. Therefore, Sales Tax on Luxury Goods may be added to the price of the Taxable Goods concerned or charged to expenses pursuant to statutory provisions on Income Tax.

 

Example:

Taxable Person “A” imports Taxable Goods with an Import Value of IDR5,000,000.00. These Taxable Goods, in addition to being subject to Value Added Tax, are also subject to Sales Tax on Luxury Goods at a rate of 20%. Therefore, the calculation of Value Added Tax and Sales Tax on Luxury Goods payable on the import of the Taxable Goods is:

-	Tax Base = IDR5,000,000.00
-	Value Added Tax: 10% x IDR5,000,000.00 = IDR500,000.00
-	Sales Tax on Luxury Goods: 20% x IDR5,000,000.00 = IDR1,000,000.00

 

Next, Taxable Person “A” uses the Taxable Goods as part of other Taxable Goods for which the supply is subject to Value Added Tax of 10% and Sales Tax on Luxury Goods of 35%. Because the Sales Tax on Luxury Goods that has been paid for the imported Taxable Goods is non-creditable, the Sales Tax on Luxury Goods of IDR1,000,000.00 may be added to the price of Taxable Goods produced by Taxable Person “A” or charged to expenses.

 

Further, Taxable Person “A” sells the produced Taxable Goods to Taxable Person “B” with a Selling Price of IDR 50,000,000.00. Therefore, the calculation of Value Added Tax and Sales Tax on Luxury Goods payable is:

-	Tax Base = IDR50,000,000.00
-	Value Added Tax: 10% x IDR50,000,000.00 = IDR5,000,000.00
-	Sales Tax on Luxury Goods: 35% x IDR50,000,000.00 = IDR17,500,000.00
In this example, Taxable Person “A” may credit the Value Added Tax of IDR500,000.00 above against the Value Added Tax of IDR5,000,000.00.

 

On the other hand, the Sales Tax on Luxury Goods of IDR1,000,000.00 is non-creditable, either against the Value Added Tax of IDR5,000,000.00 or against the Sales Tax on Luxury Goods of IDR17,500,000.00.

For Taxable Persons that have paid Sales Tax on Luxury Goods upon acquisitions of Taxable Luxury Goods, provided that Sales Tax on Luxury Goods has not been charged to expenses, the Taxable Persons are entitled to refunds of the Sales Tax on Luxury Goods that they have paid, if the said Taxable Persons have exported the Taxable Luxury Goods.

 

Example:

Taxable Person “A” purchases a car from a Sole Agent at IDR100,000,000.00.

 

Taxable Person “A” pays Value Added Tax and Sales Tax on Luxury Goods of IDR10,000,000.00 and IDR35,000,000.00 respectively. If the car is subsequently exported, Taxable Person “A” is entitled to a refund of Value Added Tax of IDR10,000,000.00 and Sales Tax on Luxury Goods of IDR35,000,000.00 paid upon purchasing the car.

 

There are no relevant regulations.

The collection of Value Added Tax and Sales Tax on Luxury Goods adheres to the accrual principle, which implies that the time of supply occurs when Taxable Goods or Taxable Services are supplied even though the payment for the supply has not been received or has not been completely received or upon an import of Taxable Goods. The time of supply for transactions conducted through electronic commerce shall comply with this provision.

Subparagraph a

Sufficiently clear.

Subparagraph b

Sufficiently clear.

Subparagraph c

Sufficiently clear.

Subparagraph d

In the event that an individual or entity utilises Intangible Taxable Goods from outside the Customs Territory within the Customs Territory or utilises Taxable Services from outside the Customs Territory within the Customs Territory, the time of supply occurs when the individual or entity begins to utilise the Intangible Taxable Goods or Taxable Services within the Customs Territory. This is related to the fact that the suppliers of the Intangible Taxable Goods or Taxable Services are outside the Customs Territory, thereby, they cannot be registered as Taxable Persons. Therefore, the time of supply is no longer associated with the time of supply but is associated with the time of consumption.

Subparagraph e

Sufficiently clear.

Subparagraph f

Sufficiently clear.

Subparagraph g

Sufficiently clear.

Subparagraph h

Sufficiently clear.

In the event that payment is received before the supply of Taxable Goods as referred to in Article 4 paragraph (1) subparagraph a, before the supply of Taxable Services as referred to in Article 4 paragraph (1) subparagraph c, before the commencement of utilisation of Intangible Taxable Goods from outside the Customs Territory as referred to in Article 4 paragraph (1) subparagraph d or before the commencement of utilisation of Taxable Services from outside the Customs Territory as referred to in Article 4 paragraph (1) subparagraph e, the time of supply is at the time of payment.

Sufficiently clear.

Sufficiently clear.

Sufficiently clear.

 

There are no relevant regulations.

For individual Taxable Persons, the place of supply is the residence and/or place of business, whereas for corporate Taxable Persons, the place of supply is the domicile and place of business.

 

If Taxable Persons have one or more places of business outside their residence or domicile, each of these places constitutes places of supply and the Taxable Persons are required to report their businesses to be registered as Taxable Persons.

 

If Taxable Persons have more than one place of supply which is in the working area of ​​1 (one) Office of the Directorate General of Taxes, for all of the places of supply, the Taxable Persons shall choose one place of business as the place of supply responsible for all of their places of business, unless the Taxable Persons desire more than 1 (one) place of supply, these Taxable Persons must notify the Director General of Taxes.

 

In certain cases, the Director General of Taxes may determine a place other than the residence or domicile and place of business as the place of supply.

 

Example 1:

Individual A who lives in Bogor has a business in Cibinong. If in the residence of individual A, there are no supplies of Taxable Goods and/or Taxable Services, individual A is only required to report his business to be registered as Taxable Persons at the Cibinong Small Taxpayer Office because the place of supply for individual A is Cibinong. On the other hand, if the supplies of Taxable Goods and/or Taxable Services are only performed by individual A at his residence, individual A is only required to register at the Bogor Small Taxpayer Office. However, if both in his residence and place of business, individual A performs supplies of Taxable Goods and/or Taxable Services, individual A must register at the Bogor Small Taxpayer Office and Cibinong Small Taxpayer Office because the places of supply are Bogor and Cibinong.

 

Different from individuals, corporate Taxable Persons are required to register both at domicile and place of business because corporate Taxable Persons are considered performing supplies of Taxable Goods and/or Taxable Services in both places.

 

Example 2:

PT A has 3 (three) places of business, namely in the cities of Bengkulu, Bintuhan and Manna, all three of which are under the service of 1 (one) tax office, namely the Bengkulu Small Taxpayer Office. The three places of business perform supplies of Taxable Goods and/or Taxable Services and sales administration and financial administration, thereby, PT A is liable to tax in those three places or cities. In such circumstances, PT A is required to choose one of the places of business to report its business to be registered as a Taxable Person, for example, the place of business in Bengkulu. PT A, which has a place of business in Bengkulu, is responsible for reporting all businesses carried out by the company’s three places of business.

 

In the event that PT A desires the places of business in Bengkulu and Bintuhan to be designated as the places of supply for all of its businesses, PT A is required to notify the Head of the Bengkulu Small Taxpayer Office.

If Taxable Persons are liable to tax at more than 1 (one) place of business, the Taxable Persons, in fulfilling their tax obligations, may submit written notification to the Director General of Taxes to choose 1 (one) or more places as the place of supply.

Sufficiently clear.

Individuals or entities, whether constituting Taxable Persons or non-Taxable Persons, that utilise Intangible Taxable Goods from outside the Customs Territory within the Customs Territory and/or utilise Taxable Services from outside the Customs Territory within the Customs Territory, remain liable to tax at the residence and/or place of business for these individuals or at the domicile and/or place of business for these entities.

 

There are no relevant regulations.

Tax Invoices may only be prepared by Taxable Persons. The prohibition of preparing Tax Invoices by non-Taxable Persons is intended to protect buyers from improper tax collection.

Sufficiently clear.

 

There are no relevant regulations.

In the event that Taxable Persons perform supplies of Taxable Goods or supplies of Taxable Services to Value Added Tax Collection Agents, the Value Added Tax Collection Agents are required to collect, remit and file the tax they collect. However, Taxable Persons performing supplies of Taxable Goods or supplies of Taxable Services to Value Added Tax Collection Agents remain required to file taxes collected by Value Added Tax Collection Agents.

Sufficiently clear.

 

There are no relevant regulations.

One of the principles that must be adhered to in the Taxation Law is the enactment and application of equal treatment to all Taxpayers or to tax cases which are, in principle, the same as adhering to statutory provisions. Therefore, any facility in the field of taxation, if absolutely necessary, must refer to the above rules and must be maintained, thereby, the application does not deviate from the purpose and objective of the granting of such facilities.

 

The purpose and objective of the granting of facilities are, in principle, to provide tax facilities that are absolutely necessary, specifically for the success of sectors of economic activities with high priorities on the national scale, encouraging exports with high national priorities in certain regions or certain places, encouraging the development of businesses and increasing competitiveness, assisting in handling national natural disasters and national non-natural disasters as well as facilitating national development.

Subparagraph a

The tax concessions provided to encourage exports, among others, are in the form of facilities in supporting activities of exporters.

 

Exporting refers to any activity of releasing Tangible Taxable Goods from within the Customs Territory to outside the Customs Territory without going through supplies to other parties.

Subparagraph b

Sufficiently clear.

Subparagraph c

Sufficiently clear.

Subparagraph d

Sufficiently clear.

Subparagraph e

Sufficiently clear.

Subparagraph f

Sufficiently clear.

Subparagraph g

Sufficiently clear.

Subparagraph h

Sufficiently clear.

Subparagraph i

Sufficiently clear.

Subparagraph j

The tax concessions to support the availability of certain strategic goods and services in the context of national development are granted very selectively and limitedly and take into account the impact on state revenues.

 

Certain Taxable Goods and/or Taxable Services that are exempt from Value Added Tax are, among others:

1.	basic necessities, including:
	a)	rice;
	b)	grains;
	c)	corn;
	d)	sago;
	e)	soybeans;
	f)	salt, both iodise and non-iodise;
	g)	meat, i.e. unprocessed fresh meat, but has undergone the process of being slaughtered, skinned, cut, cooled, frozen, packaged or unpackaged, salted, limed, pickled, preserved in other ways and/or boiled;
	h)	eggs, i.e. unprocessed eggs, including eggs that are cleaned, salted or packaged;
	i)	milk, i.e dairy milk, that has undergone cooling or heating, does not contain added sugar or other ingredients and/or packaged or unpackaged;
	j)	fruits, i.e. picked fresh fruits that have been washed, sorted, peeled, cut, sliced, graded and/or packaged or unpackaged;
	k)	vegetables, i.e. fresh vegetables that are picked, washed, drained and/or stored at low temperatures, including chopped fresh vegetables.
2.	medical healthcare services, including:
	a)	certain healthcare services, including:
		1)	general practitioner, specialist and dentist services;
		2)	veterinary services;
		3)	health professional services, such as acupuncturists, dentists, nutritionists and physiotherapists;
		4)	midwifery and traditional birth attendant services;
		5)	paramedical and nursing services;
		6)	hospital, maternity hospital, health clinic, health laboratory and sanatorium services;
		7)	psychologist and psychiatrist services; and
		8)	alternative medicine services, including those performed by psychics.
	b)	health services covered by the national health insurance.
3.	social services, including:
	a)	orphanage and nursing home services;
	b)	firefighting services;
	c)	aid in accident services;
	d)	rehabilitation agency services;
	e)	provision of funeral homes or funeral services, including crematoriums; and
	f)	services in sports, except commercial sports,
	that are non-profit.
4.	financial services, including:
	a)	services of raising funds from the public in the form of current accounts, time deposits, deposit certificates, savings accounts and/or other equivalent forms;
	b)	services of fund placement, fund borrowing or fund lending to other parties using letters, means of telecommunication or sight drafts, cheques or other means;
	c)	financing services, including financing based on sharia principles, in the form of:
		1)	financial lease;
		2)	factoring;
		3)	credit card business; and/or
		4)	consumer financing;
	d)	loan distribution services on the basis of pawn law, including sharia and fiduciary pawns; and
	e)	guarantee services.
5.	“insurance services” refer to insurance services that include loss insurance, life insurance and reinsurance carried out by insurance companies to insurance policy holders, excluding insurance support services, such as insurance agents, insurance loss assessors and insurance consultants.
6.	educational services, including:
	a)	school educational services, such as services of general, vocational, special, official, religious, academic and professional education; and
	b)	out-of-school learning services.
7.	sufficiently clear;
8.	labour services, including:
	a)	labour services;
	b)	labour outsourcing/labour supply services provided that the entrepreneur supplying the labour is not responsible for the labour’s work; and
	c)	training services for workers.

The special treatment in the form of Value Added Tax payable but not collected, implies that Input VAT in respect of supplies of Taxable Goods and/or Taxable Services eligible for the special treatment remains creditable. Therefore, Value Added Tax remains payable but is not collected.

 

Example:

Taxable Person A produces Taxable Goods eligible for a facility from the state, namely Value Added Tax payable not collected on supplies of Taxable Goods.

 

To produce the Taxable Goods, Taxable Person A uses other Taxable Goods and/or Taxable Services as raw materials, indirect materials, capital goods or other cost components.

 

When purchasing other Taxable Goods and/or Taxable Services, Taxable Person A pays Value Added Tax to the Taxable Person that sells or supplies the Taxable Goods and/or Taxable Services.

 

Value Added Tax paid by Taxable Person A to the supplier Taxable Person constitutes Input VAT that may be credited against Output VAT, Input VAT remains creditable against Output VAT even though Output VAT is nil because the taxable person is eligible for the Value Added Tax non-collected facility from the state pursuant to provisions referred to in paragraph (1).

Different from the provisions in paragraph (2), the special treatment in the form of exemption from Value Added Tax results in no Output VAT, thereby, Input VAT in respect of the supplies of Taxable Goods and/or Taxable Services eligible for the exemption is non-creditable.

 

Example:

Taxable Person B produces Taxable Goods eligible for facilities from the state, namely the supplies of these Taxable Goods are exempt from Value Added Tax. To produce these Taxable Goods, Taxable Person B uses other Taxable Goods and/or Taxable Services as raw materials, indirect materials, capital goods or other cost components. When purchasing the other Taxable Goods and/or Taxable Services, Taxable Person B pays Value Added Tax to the Taxable Person that sells or supplies the Taxable Goods and/or Taxable Services. Although the Value Added Tax paid by Taxable Person B to the supplier Taxable Person constitutes creditable Input VAT, because there is no Output VAT due to the granting of exemption facility as referred to in paragraph (1), the Input VAT becomes non-creditable.

 

There are no relevant regulations.

To attract individual foreign passport holders to visit Indonesia, these individuals are given tax incentives. The incentives are in the form of refunds of Value Added Tax and Sales Tax on Luxury Goods paid on any purchase of Taxable Goods in Indonesia which are then taken by the individuals outside the Customs Territory.

Taxable Goods purchased within 1 (one) month before an individual foreign passport holder leaves Indonesia are deemed to be consumed outside the Customs Territory. Therefore, the Tax Invoice that may be used as the basis for refunds of Value Added Tax and Sales Tax on Luxury Goods is required only for Tax Invoices issued within 1 (one) month before the individual foreign passport holder leaves Indonesia.

 

For individual foreign passport holders who do not have Taxpayer Identification Numbers, the Tax Invoice that may be used to request refunds of Value Added Tax and Sales Tax on Luxury Goods must include identity in the form of names, passport numbers and full address of the individuals in the countries that issue the passport.

Sufficiently clear.

Sufficiently clear.

Sufficiently clear.

 

There are no relevant regulations

Subparagraph a

Tax Base in the form of other values is imposed to ensure legal certainty in terms of Selling Price, Remuneration Value, Import Value and Export Value as Tax Base is difficult to determine.

Subparagraph b

Sufficiently clear.

Subparagraph c

Sufficiently clear.

Subparagraph d

Sufficiently clear.

Subparagraph e

Sufficiently clear.

Subparagraph f

Sufficiently clear.

Subparagraph g

Sufficiently clear.

Subparagraph h

Sufficiently clear.

Subparagraph i

Sufficiently clear.

 

There are no relevant regulations.

Sufficiently clear.

 

There are no relevant regulations.

Sufficiently clear.

 

There are no relevant regulations.

Sufficiently clear.

 

There are no relevant regulations.