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Purwantono, Suherman & Street address: Surja (PSS) Consult Indonesia Stock Exchange Building Mail address: Tower 1, 14th Floor P.O. Box 1973 JI. Jend. Sudirman Kav. 52-53 Jakarta 10019 Jakarta 12190
Indonesia Indonesia
Indirect tax contacts
Iman Santoso
+62 (21) 5289-5250 iman.santoso@id.ey.com
Elly Djoenaidi +62 (21) 5289-5590 elly.djoenaidi@id.ey.com
Novita Fitriawatie
+62 (21) 5289-5261 novita.fitriawatie@id.ey.com
Yuliana S Dewi +62 (21) 5289-5625 yuliana.s.dewi@id.ey.com
Wisamodro Jati +62 (21) 5289-5220 wisamodro.jati@id.ey.com
A. At a glance
Name of the tax
Value-added tax (VAT)
Local name Pajak Pertambahan Nilai (PPN)
Date introduced 1 January 1984
Trading bloc membership Association of South East Asian Nations (ASEAN)
Administered by The Directorate General of Taxation (http://www.pajak.go.id)
VAT rates
Standard 10% (increasing to 11% from 1 April 2022)
Other Zero-rated (0%) and exempt
VAT number format 11.111.111.1-111.111
VAT return periods Monthly Thresholds
Registration
Small entrepreneurs IDR4.8 billion for supplies of goods or services
Other businesses None
Recovery of VAT by non-established businesses No
B. Scope of the tax
VAT applies to the following transactions:
• Supplies of taxable goods and taxable services made in the Indonesia Customs Area in the course of a business by a taxable entrepreneur
• Imports of taxable goods into Indonesia, regardless of the status of the importer
• The use of taxable services and intangible goods provided by overseas entities inside the Indonesia Customs Area
• Export of taxable goods (tangible or intangible) and/or taxable services by a taxable entrepre neur
• Self-construction activities performed outside the course of business or work by an individual or company if the results are for the person’s own use or for use by others.
• Deliveries of assets not originally acquired for sale; an exemption applies if the input tax on acquisition cannot be credited because the purchase was not related to business or because it was a purchase of a luxury car
• The definition of delivery of taxable goods excludes delivery of taxable goods under a consign ment
• The delivery of taxable goods as equity contribution shall not be regarded as a taxable delivery, if:
Both transferor and the transferee are registered as a taxable person (i.e., a “VAT-able entre preneur”)
The purpose of taxable goods is “delivery for a capital contribution to a company” as defined by the VAT law
C. Who is liable
All businesses engaged in supplies of goods or services subject to VAT are required to register for VAT as “taxable entrepreneurs,” unless they qualify as “small entrepreneurs.” This requirement also applies to any permanent establishment of a nonresident business located in Indonesia.
Exemption from registration. The VAT law in Indonesia does not contain any provision for exemp tion from registration.
Voluntary registration and small businesses. It is possible for a taxable business that is not required to register for VAT under the VAT law in Indonesia (e.g., because it makes supplies within the scope of VAT but its turnover is lower than any registration threshold) to register for VAT on a voluntary basis (e.g., because all its supplies are made to other businesses and it wants to recover input tax on its purchases).
A business qualifies as a small entrepreneur if its gross annual turnover (from supplies of goods or services) does not exceed IDR4.8 billion.
Group registration. Group VAT registration is not allowed in Indonesia.
Non-established businesses. Non-established businesses cannot register for VAT in Indonesia. They must have a permanent establishment located in Indonesia in order to register for VAT. However, non-established businesses who sell digital goods and/or services could be appointed as a VAT Collector on digital goods and/or services.
Tax representatives. A legal requirement to appoint a fiscal representative in Indonesia is not imposed. However, a taxable entrepreneur may appoint a proxy to handle its VAT refunds or audits.
Reverse charge. VAT is imposed on utilization of taxable services and intangible taxable goods provided by overseas entities inside the Indonesia Customs Area. The VAT shall be self-assessed by the party that receives the taxable services and intangible taxable goods.
Utilization of intangible taxable goods and taxable services shall occur at the earliest of the fol lowing moments:
• The acquisition price is declared as debt by the party that receives them.
• The selling price of intangible taxable goods or reimbursement for taxable services is collected by the party who delivers them.
• The acquisition price of intangible taxable goods or taxable services is paid, entirely or in part, by the party who utilizes them.
Depending on the status of the party who utilizes the taxable service or intangible taxable goods, the paid self-assessed VAT shall be claimed as tax credit or claimed as cost.
Domestic reverse charge. There are no domestic reverse charges in Indonesia.
Digital economy. Effective 1 July 2020, VAT PMSE (Perdagangan Melalui Sistem Eletronik) (i.e., trading through an electronic system) is liable to VAT at a rate of 10% and shall be imposed on imported digital goods and/or services in the context of business-to-business (B2B) and busi ness-to-consumer (B2C) transactions.
A customer is an individual or entity that provides an Indonesian billing address or mailing address for its account with the seller, uses payment facilities such as credit or debit cards issued by Indonesian financial institutions, and/or places orders using Indonesian internet protocol addresses or country calling code.
Digital goods are any intangible goods in the form of electronic or digital information, including goods that are converted in this format and goods that are originally in electronic format, but are not limited to software, multimedia and/or electronic data.
Digital services are any services sent through the internet or an electronic network, automatiza tion or involves little human intervention, and are impossible to be conducted without information technology, and not only limited to software-based services.
The following taxable persons must register and charge VAT on their supplies in Indonesia:
• Overseas entrepreneurs or online retailers who supply digital products to Indonesian customers (B2B and B2C)
• Overseas operators of online marketplaces who supply digital products to Indonesian custom ers (B2B and B2C)
• Indonesian operators of online marketplaces who supply foreign digital products to Indonesian customers (B2B and B2C)
For all those meeting the threshold and appointed as VAT collector by the Director General of Taxes (DGT), the threshold is as follows:
• The value of transactions with buyers in Indonesia exceeds IDR600 million (approx. USD42,850) in one year or IDR50 million (approx. USD3,570) in one month And/or
• The amount of traffic or access in Indonesia exceeds 12,000 in one year or 1,000 in one month
PMSE businesses meeting the threshold but not appointed yet by the DGT can choose to be appointed as PMSE VAT Collector by submitting notification to the DGT.
The DGT appoints PMSE Entrepreneurs who have met the criteria threshold as PMSE VAT Collectors by issuing the Director General of Taxes’ Decree that takes effect at the beginning of the following month after the date of the decision. PMSE Entrepreneurs may choose to be appointed as PMSE VAT Collectors through notification to the Director General of Taxes. This notification will be taken into consideration for the appointment of PMSE VAT Collectors.
A PMSE VAT Collector will be given a tax ID number as a means of tax administration used as identification of a PMSE VAT Collector in exercising their rights and fulfilling their tax obliga tions.
Invoicing, price display and record-keeping are in the form of commercial invoices, billing, order receipts or similar documents that state the collection of VAT and VAT payment.
PMSE VAT Collectors are required to deposit VAT for each tax period at the bank/perception post or other perception institution by the end of the month following the month after the tax period ends. PMSE VAT Collectors are required to report the collected and paid VAT on a quarterly
basis, no later than the end of the month following the month after the quarterly period ends. At the request of the DGT, PMSE VAT Collectors are required to report details of VAT transactions collected for each one calendar year period, i.e., the PMSE VAT annual report.
There are no other specific e-commerce rules for imported goods in Indonesia.
Online marketplaces and platforms. Overseas and domestic operators of online marketplaces who supply digital goods/services to Indonesian customers (B2B and B2C) that are meeting the threshold could be appointed by or submit notification to the DGT to be appointed as VAT col lector on digital goods and/or services.
For physical goods sold by an overseas online marketplace to an Indonesian customer, import duty for a shipment of goods is exempt if total import value is up to customs value of freeonboard USD3 per shipment. This regulation is in effect from 30 January 2020.
Registration procedures. Taxable persons who meet the definition of “taxable entrepreneur” must register with one of these two tax authorities:
• The tax office whose jurisdiction includes the taxable person’s residence or domicile or place of business
• Another tax office assigned to that taxable person by the provisions of tax laws and regulations
In the event that a taxable person’s business is resident in two or more tax office jurisdictions, the DGT can stipulate where the taxable person must register.
The application should be directly submitted to the tax office using the hard copy form pre scribed by the DGT. For individual entrepreneurs, they have to bring an ID card (for Indonesian citizens) or copy of passport, limited stay permit (KITAS) or permanent stay permit (KITAP) (for foreign nationals). For corporate entrepreneurs, they have to bring the deed of establishment or document of establishment and the amendments (for domestic entity) or statement letter of appointment from the head office (for permanent establishment) and documents of identity of all administrators.
During the verification process, the tax office may conduct a visit to the taxable person’s office.
Deregistration. The DGT ex officio or upon application of the registered taxable person can revoke the VAT registration number in the event that one of the following circumstances arises:
• The taxable entrepreneur has noneffective taxable person status
• The taxable entrepreneur undergoes temporary deactivation of taxable entrepreneur account and not conveying clarification or conveying clarification but rejected
• The taxable entrepreneur who, based on field examination results in the context of activation of taxable entrepreneur account, there is no conformity of the information
• The taxable entrepreneur who doesn’t submit a request for activation of taxable entrepreneur account within three months
• The individual taxable entrepreneur who has passed away and did not leave any inheritance
• The taxable entrepreneur of permanent establishment that has ceased business activity in Indonesia
• The taxable entrepreneur’s place of VAT payment has been centralized in other places
• The taxable entrepreneur misuses the VAT registration number
The revocation of a VAT registration number shall be performed by tax audit, and it shall not eliminate any VAT obligation of the taxable entrepreneur.
Changes to VAT registration details. If there is a change in taxable person’s registration details (e.g., name of company, address, type of business, change of director or commissioner), the tax able person has to submit a taxable person data change form that has been prescribed by the DGT. There is no time limit for this taxable person data change form submission, but it is suggested to
submit it immediately when the change happens. In the event the change relates to the change of authorized person for signing the tax invoices, the taxable person must submit a notification let ter to inform the tax office of the new authorized person to sign the tax invoice. This letter should be submitted at the latest by the end of following month since the new authorized person starts signing the tax invoice.
D. Rates
The term “taxable supplies” refers to supplies of goods and services that are liable to a rate of VAT, including at the zero-rate.
The VAT rates are:
• Standard rate: 10% (increasing to 11% from 1 April 2022)
• Zero-rate: 0%
The standard rate of VAT applies to all supplies of goods or services unless a specific measure provides for the zero rate or an exemption.
The Harmonization of Tax Regulations (HPP) law was signed by the Indonesian president and officially enacted on 29 October 2021. The law announced that the standard VAT rate will gradually increase from 10% to 11% (effective from 1 April 2022) and from 11% to 12% (at a point in the future no later than 1 January 2025). Certain taxable goods/services may also be subject to a specific VAT rate.
In addition to the above, also in the HPP law, there is a broadening of the VAT base to remove the exemptions for a number of previously exempt services (e.g., medical, financial services).
Certain previously exempt essential goods and mined minerals will now also be subject to VAT. However, there is a possibility for the implementing regulations to provide VAT concessions for certain of the aforementioned goods and services. At the time of preparing this chapter, further detail on the specific goods and services have not yet been announced.
Examples of goods and services taxable at 0%
• Exported taxable services subject to zero-rated VAT:
Activities that are inherently related to the exported movable goods, which will be used outside Indonesian Customs Area (ICA); under this type of activities are:
Toll manufacturing services
Repair and maintenance services
Freight forwarding service on an export transaction
Activities that are inherently related to the immovable properties that are located outside ICA; under this category are construction consulting services, which cover feasibility study, planning and construction designing of a building or building master plan that is located outside ICA
Activities other than the above for which the result is delivered to be utilized outside ICA, by way directly or indirectly delivered, among others, by post and electronic channel; or the provision of rights to be used/accessed outside of the ICA, based on the request from the recipient of taxable services; under this type of services are:
Technology and information services
Research and development services
Transportation rental services in the form of rental of aircraft and/or vessel for interna tional aviation or shipping activity
Business and management consulting services, legal consulting services, architecture and interior design consulting services, human resources consulting services, engineering consulting services (engineering services), marketing consulting services (marketing services), accounting or bookkeeping services, financial statement audit services and tax services
Trading services in the form of procurement to find suppliers within the ICA for export transaction
Interconnection, satellite providers and/or communication/data connectivity services
The term “exempt supplies” refers to supplies of goods and services that are not liable to VAT and that do not qualify for input tax deduction.
The VAT exemption also applies to supplies or importation of goods that fall under the category of “strategic goods.”
Examples of exempt supplies of “strategic goods”
• Capital goods in the form of plant machinery and equipment, in either built-up or knock-down condition, which is used directly in the process of producing taxable goods by the taxable entrepreneur who produces the taxable goods, including those whose acquisitions are carried out by parties doing integrated construction work, excluding spare parts
• Livestock, poultry, fish feed and raw materials for the manufacture of livestock, poultry and fish feed
• Agricultural produce (goods produced from business activities in the sectors of agriculture, plantations, forestry, livestock farming, hunting or trapping, or breeding fisheries, whether from fishing or cultivation)
• Seeds or sperm of agricultural, plantation, forestry, livestock, breeding or fishery products
• Raw materials of silver crafts in the form of silver granules and/or in the form of silver bars
• Housing units of Rumah Susun Sederhana Milik, whose acquisition is financed through subsidized home ownership credit/financing that meets the provisions of certain requirements
• Electricity, except for residences with power greater than 6,600 watts
• Liquified natural gas
• Official textbooks
• Religious books
• Vaccines
Examples of exempt supplies of goods and services
• Certain ships, aircraft and trains
• Some real estate transactions
• Services supplied to local shipping companies
• Services supplied by the national army
The Free Trade Zone (FTZ) regimes provide a VAT exemption for the delivery of goods or ser vices within the FTZ and the non-collection of VAT for the delivery of taxable goods or services to the FTZ. The areas that have been confirmed as FTZs are Batam Island, Sabang Island, and Bintan and Karimun Islands.
Nontaxable goods include food and beverages served in hotels, restaurants, food courts and such other places (dine-in or take-away, including catering), and money, gold bars and valuable documents.
Nontaxable services include the following:
• Religious services
• Commercial art and entertainment services that are subject to regional entertainment tax
• Hotel services
• Public services provided by the government
• Parking space services
• Catering services
Option to tax for exempt supplies. The option to tax exempt supplies is not available in Indonesia.
E. Time of supply
In Indonesia, VAT becomes payable at the earlier of the date on which the taxable goods or ser vices are supplied or the date of receipt of advance payments. Tax invoices must be issued when the delivery of goods or services takes place, or on receipt of payment for a supply of goods or services, whichever is earlier.
Deposits and prepayments. In Indonesia, there is no requirement to account for VAT on deposits. For prepayments, the time of supply rules are the same as the normal time of supply rules. The delivery of the goods is considered to take place when the title of the goods is transferred to the customer, or when the invoice is issued, whichever is earlier. Whereas the supply of services is considered to take place when the invoice is issued. However, the tax invoice should be issued on the date of receipt of prepayments as in case of prepayments, the payment for a supply of goods or services happens earlier.
Continuous supplies of services. There are no special time of supply rules for continuous supplies of services. As such, the general time of supply rules apply (as outlined above), i.e., the time of supply is considered to take place when the invoice is issued.
Goods sent on approval for sale or return. There are no special time of supply rules for goods sent on approval for sale or return. As such, the general time of supply rules apply (as outlined above), i.e., the delivery of the goods is considered to take place when the title of the goods is transferred to the customer, or when the invoice is issued, whichever is earlier.
Reverse-charge services. There are no special time of supply rules for supplies of reverse-charge services. As such, the general time of supply rules apply (as outlined above), i.e., the supply of services is considered to take place when the invoice is issued.
Leased assets. For leased assets, the time of supply is considered to take place when the invoice is issued or when the payment is received, whichever is earlier.
Imported goods. The time of supply for imported goods is either the date of importation, or, for goods imported by companies determined to be bonded zone companies, the date on which the goods leave the bonded zone area.
F. Recovery of VAT by taxable persons
A taxable person may recover input tax, which is VAT charged on taxable goods and taxable services supplied to it for business purposes to the extent that costs corresponding to the input tax are for sales that are subject to VAT. A taxable person generally recovers input tax by deduct ing it from output tax, which is VAT charged on supplies made. If the input tax exceeds output tax due, this excess tax can be claimed as a refund.
A valid standard tax invoice or customs document must generally accompany a claim for input tax.
Input tax for the acquisition of taxable goods and/or services, importation of taxable goods and utilization of intangible taxable goods and/or taxable services utilization from outside Indonesian Customs Area within Indonesian Customs Area before the entrepreneur is confirmed as a taxable entrepreneur, can be credited by the taxable entrepreneur using the input tax’s credit ing guidelines 80% of the output tax that should be levied.
Input tax includes VAT charged on goods and services supplied in Indonesia, VAT paid on imports and self-paid VAT on the use of taxable services and intangible goods provided by over seas entities inside the Indonesia Customs Area (under the self-paid method, the party who uti lizes the intangible goods or services should pay the 10% VAT directly to the state treasury on behalf of the overseas party).
The time limit for a taxable person to reclaim input tax in Indonesia is three months. Input tax that can be credited but has not been credited with output tax in the same tax period, may be credited in the next tax period no later than three months after the end of the relevant tax period, as long as it has not been charged as a cost.
Input tax on taxable goods and services purchased or imported that were credited and refunded during the preproduction stage by a taxable firm must be repaid if the enterprise is unable to produce taxable goods within three years since the taxable person credited the input tax for the first time. The period can be extended for certain industries up to five years (for industries that produce taxable goods) or to six years (for industries such as the National Strategic Project that obtain assignment from the government).
Input tax that is not reported in the VAT return when being identified in a tax audit can be cred ited referring to the provisions and law in the taxation field. Crediting the input tax can be done by disclosing the relevant tax invoice during the tax audit period to be included in the assessment letter that would be issued. The additional input tax can be credited, as long as the notification of tax audit result is not issued yet.
Input tax that is collected through the issuance of a tax assessment can be credited by the taxable person (i.e., the tax principal amount not including tax sanction) as being stated in the tax assess ment, provided that:
• The tax assessment is issued only to collect input tax on taxable goods and/or services
• The taxable person approves the entire audit results on tax assessments
• The VAT payable and tax sanctions as stated in the tax assessment should have been settled
• No legal remedy is made on the tax assessment
• It is in accordance with the provisions of laws and regulations in the field of taxation
The export of “strategic goods” (including animal feed, raw materials for production of animal feed, agricultural products and seeds), is subject to 0% VAT. A taxable person exporting “strate gic goods” may claim an input tax credit relating to export sales. This can be claimed as a tax refund if it results in a VAT credit (that is, the balance of the input tax credit is greater than the amount of output tax).
Nondeductible input tax. In general, a credit may not be claimed for input tax on purchases of goods and services that are not used for business purposes (for example, goods acquired for private use by an entrepreneur).
The following lists provide some examples of items of expenditure for which input tax is not creditable and examples of items for which input tax is creditable.
Examples of items for which input tax is nondeductible
• Purchases used for nonbusiness purposes
• Business gifts
• Purchase, lease or hire of benefits in kind (such as employee accommodation or personal cars)
Examples of items for which input tax is deductible (if related to a taxable business use)
• Advertising
• Attending conferences and seminars
• Purchase, lease or hire of cars, vans or trucks
• Maintenance and fuel for vans and trucks
• Business travel expenses
Partial exemption. Where a business makes supplies of taxable and nontaxable goods and ser vices, the input tax should be recalculated/proportionated to reflect the percentage of supplies that are taxable, at the latest at the third month after the end of a book year. Approval from the
tax authorities is not required to use the partial exemption standard method or special methods in Indonesia. Special methods are not allowed in Indonesia.
Capital goods. In Indonesia, capital goods are classified as tangible assets with a useful life of more than one year, including expenses relating to the acquisition of capital goods that are capi talized into the acquisition price of the capital goods. Input tax incurred on capital goods can be recovered in line with the normal recovery rules (see above). There are no special rules in respect to timing and lifespan of the goods.
Refunds. If the amount of input tax credits in a period exceeds the output tax in the same period, the excess amount is refundable. In general, refund claims must be made at the end of the year. However, certain taxable persons may claim refunds on a monthly basis. The Indonesian tax authorities conduct audits to ensure the validity of VAT refund claims. The tax audit must be concluded within one year after the date of the request for a refund.
If the tax audit confirms that the VAT refund claim is valid, the taxable person may recover the overpaid tax within one month after the date of the tax audit assessment letter.
The Indonesian tax authorities must pay an interest penalty for delays in making valid repay ments, calculated at the rate per month (the benchmark interest rate applicable on the date the interest compensation is calculation, divided by 12) of the tax refundable.
An accelerated refund process through a tax examination is provided for certain taxable entre preneurs who meet the criteria for a compliant taxable person meeting certain conditions (i.e., request for refund no more than IDR1 billion), or a low-risk taxable person. The VAT overpay ment is refunded within one month after the request for a refund is submitted to the local tax office. Any VAT underpayment assessed in a post-VAT audit should be paid back, plus a penalty of 100%.
Pre-registration costs. Input tax incurred on pre-registration costs in Indonesia is recoverable as long as it meets the requirements in accordance with the prevailing regulations.
Bad debts. Output tax accounted for on supplies that do not get paid by recipient (i.e., bad debts) cannot be recovered in Indonesia.
Noneconomic activities. Input tax incurred on purchases that are used for noneconomic activities is not recoverable in Indonesia.
G. Recovery of VAT by nonresident businesses
Input tax incurred by non-established businesses in Indonesia is not recoverable.
H. Invoicing
VAT invoices. A standard tax invoice for all taxable supplies made must be provided by Indonesian taxable entrepreneurs except those who are engaged in retail business or are the end-users of the goods.
The tax invoice number is determined by the DGT. Indonesian taxable entrepreneurs are required to request the tax invoice number from the DGT before issuing tax invoices.
Regarding the use of tax invoice serial numbers and the procedure for issuing a tax invoice, the rules are as follows:
• A taxable entrepreneur shall issue a tax invoice using the tax invoice serial number, which is determined by the DGT.
• The tax invoice serial number provided by the DGT should be used to issue the tax invoice on or after the date of the tax invoice serial number granting letter, within the calendar year indi cated by the year code in the tax invoice serial number.
• If the date of the tax invoice precedes the date of the tax invoice serial number granting letter, the tax invoice is considered incorrect and thus incomplete.
• A taxable entrepreneur does not issue tax invoice or issues an incomplete tax invoice is subject to an administrative penalty of 1% of the VAT base.
• To replace the incomplete tax invoice as defined in point 3, the taxable entrepreneur may do the following:
Cancel the incomplete tax invoice
Make a new tax invoice using the new tax invoice serial number. Ensure the date of the new tax invoice does not precede the date of the tax invoice serial number granting letter. Although in practice, when a taxable entrepreneur issues a tax invoice where the date precedes the date of the tax invoice serial number granting letter, it automatically will be rejected by the system.
• If the tax invoice as described in point 5 is issued before the date of the tax invoice serial num ber granting letter, the tax invoice is considered a late issued tax invoice.
• If an invoice is issued more than three months after the date of the tax invoice, the invoice is considered not issued.
• The cancellation of an incomplete tax invoice and the issuance of a new tax invoice as described in points 5 and 6 can be done if the monthly VAT return submitted has not been audited, an examination of open preliminary evidence has not been conducted and the taxable entrepreneur has not yet received notification of verification results.
• The late issued tax invoice as described in point 6 can be credited as input tax as long as it meets the requirements in accordance with the prevailing regulations.
Indonesian taxable entrepreneurs are also required to submit a specimen of the signature of the authorized person who will sign tax invoices.
Indonesia has adopted e-tax invoices that are prepared through an application and system pro vided by the Directorate General of Taxes, called e-Faktur. The e-Faktur provides electronic signature in the form of QR code.
A complete and correct standard tax invoice is generally necessary to support a claim for input tax credit.
Credit notes. A purchaser who returns goods to a supplier or cancels services may issue a credit note or cancellation note. A credit note or cancellation note must refer to the original tax invoice and clearly indicate details of the returned goods or canceled services. A credit note or cancella tion note may be used to adjust the amount of VAT due for a taxable supply of goods or services.
Electronic invoicing. Electronic invoicing is mandatory for all taxable persons in Indonesia. The use of an electronic tax invoice is mandatory, and noncompliance will result in a defective tax invoice subject to a fine equaling 1% of the VAT base. It is compulsory for all invoices to be processed and issued electronically via the government hosted e-Faktur platform.
Simplified VAT invoices. A (standard) tax invoice without detailed information of a buyer is like the invoice previously known as a simplified tax invoice. These are permitted, normally in retail business. Retail businesses are defined as taxable entrepreneurs that supply goods (also includes e-commerce businesses), as follows:
• Through a retail sale place, such as stores and kiosks or direct visit to end consumers
• By means of retail sales made directly to the end consumer, without being preceded by a written offer, a written booking, a contract or an auction
• In general, delivery of taxable goods or sale and purchase transactions is made in cash and the seller directly delivered the goods or the buyer directly carries the goods that it buys
The code and serial number for a simplified tax invoice are also different from tax invoices. The code and serial number of a simple tax invoice can be in the form of invoice numbers, invoice codes or determined by the taxable entrepreneur.
Self-billing. Self-billing is only allowed in Indonesia in relation to the usage of self-produced goods or services and free gifts.
Proof of exports. Exports of goods are subject to VAT at the zero-rate. However, to zero-rate the supply of exports, such supplies must be supported with evidence that the goods were exported outside Indonesia. Valid evidence of export includes “Notification of Export Goods” (PEB) documents, issued by the customs office, for goods that have been approved for loading. The identity of the exporter stated in the PEB shall be the identity of the party who actually conducts the export activity, not the forwarding company, for the output tax to be creditable against the input tax.
Foreign currency invoices. For supplies denominated in a foreign currency, the amounts of output tax shown must be stated in the domestic currency, which is the Indonesian rupiah (IDR). The official exchange rate, issued by the Minister of Finance on the date on which the tax invoice is issued, must be used to convert the currency.
Supplies to nontaxable persons. There are no special rules for tax invoices issued for supplies made by taxable persons to private consumers (e.g., no tax invoice is required unless requested by the purchaser). However, there are special rules on supplies made to the public (e.g., toll receipts, tickets and supplies made through vending machines). The receipt and tickets issued may be deemed as a tax invoice.
Records. In general, records are to be prepared in Indonesia rupiah and using Bahasa Indonesia language. English language and USD currency are permitted, provided approval from the DGT has been obtained through submitting a request using format prescribed by the DGT.
Record retention period. With regard to the VAT documents (both hard copy and electronic documents), these shall be archived for 10 years in Indonesia. In case of a VAT audit, the tax auditors may request and check the hard copy documents.
Electronic archiving. Records can be kept and archived electronically. However, in the event of tax audit or other dispute process, the DGT may request the original hard copy of the records/ documents, only tax invoice is acceptable as a printout of electronic form.
I. Returns and payment
Periodic returns. The due date for the submission of monthly VAT returns is the end of the fol lowing tax period. VAT returns should be submitted electronically.
Periodic payments. The VAT payable, if any, must be settled before the submission deadline of the monthly VAT returns, i.e., end of the following tax period.
VAT liabilities must be paid in Indonesian rupiah through an ID billing created in the DGT’s website. The payment can be settled to bank transfer using the billing code written in the ID bill ing or the taxable person can settle the payment through a bank teller by informing the teller billing code.
Electronic filing. The VAT return submission platform has been integrated with the electronic invoicing platform. The VAT return must be submitted electronically via DGT online or Application of Service Providers (ASPs) appointed by the DGT for period(s) of/before August
2020 and via e-Faktur (electronic tax invoice) web-based for period(s) of/after September 2020. The ASP must comply with the following requirements:
• It must be a legal entity.
• It must have a processing business license to be an ASP.
• It must have a processing tax ID number and already be stipulated as a taxable entrepreneur.
• It must sign an agreement with the DGT.
For electronic filing purposes, taxable entrepreneurs must apply for an Electronic Filing Identification Number (e-FIN) and obtain a digital certificate from the DGT. The local tax office must reply no later than one working day after receiving a correctly completed application.
A VAT return completed according to regulations shall be signed manually and submitted elec tronically through e-Faktur web-based, DGT online and ASP. Taxable entrepreneurs will receive proof of electronic receipt for every completed VAT return.
If there are additional documents that should be attached to the VAT return but cannot be deliv ered electronically, the taxable entrepreneur is required to deliver them to the correct tax office (where it is registered) manually or by mail or via courier with a proof-of-delivery receipt.
Payments on account. Payments on account are not required in Indonesia.
Special schemes. VAT not collected. Other VAT regimes technically eliminate the payment of VAT due. These include the following:
• The non-collection of VAT payable to companies in bonded zone areas and to manufacturers of goods for export
• The non-collection of VAT payable arising from goods or services supplied by principal con tractors of projects financed by foreign aid loans or grants
In this context, non-collection refers to the tax facility under which the VAT due is not collected for certain taxable goods and services. Under such tax facility, the related input tax can still be claimed as a tax credit.
Annual returns. Annual returns are not required in Indonesia.
Supplementary filings. No supplementary filings are required in Indonesia.
Correcting errors in previous returns. The taxable person can correct the information recorded in the VAT return by amending the VAT return. The amendment can be conducted through the same steps of creating the initial VAT return and submitted through DJP Online and ASP (for the period(s) of or before August 2020) and e-Faktur web-based (for the period(s) of or after September 2020). However, in the case that the amendment resulting in overpayment of VAT, the amendment can only be submitted at the latest two years before the expiration (i.e., within three years after the ending period). Furthermore, the amendment either resulting in an under or over payment, can only be conducted if the monthly VAT return submitted has not been audited, an examination of open preliminary evidence has not been conducted and the taxable entrepreneur has not received notification of tax audit.
Digital tax administration. There are currently no transactional reporting requirements in Indonesia.
J. Penalties
Penalties for late registration. If a taxable entrepreneur registers late, penalties may be imposed on the supplies of taxable goods and services made before the date of registration.
Penalties for late payment and filings. A penalty is charged at the rate of per month (the benchmark interest rate applicable on the date the interest compensation is calculated +5% and then
divided by 12) on late payments of VAT. In the case of a tax audit, the maximum period is 24 months. An additional penalty of IDR500,000 is assessed for each VAT return submitted late.
There is no specific penalty for the failure to notify or for late notification to the tax authorities of changes to a taxable person’s VAT registration details. For further details, please see the sub section above Changes to VAT registration details.
Penalties for errors. A penalty of 1% of the VAT base amount is imposed for the failure to issue a tax invoice or for the issuance of a tax invoice that is considered defective (including a tax invoice that is issued late).
Penalties for fraud. For severe evasion or fraud, criminal penalties apply.
Criminal offenses related to general tax administration other than the issue related to the tax invoice that cause losses to the revenue of the state are punishable by imprisonment from six months to six years and a fine of twice the amount of the unpaid or underpaid taxes (minimum fine) or of four times the amount of unpaid or underpaid taxes (maximum fine). This criminal sanction may be doubled if the taxable person commits another criminal tax offense before oneyear elapses from the date of completion of the taxable person’s jail term.
Criminal offenses related to the issuance of a tax invoice are punishable by imprisonment from two years to six years and a fine ranging from two times to six times the amount of tax declared in the tax invoice.
Personal liability for company officers. In the case there is a criminal offense committed by the tax able person, there is a possibility that the directors will be held personally liable for the offenses committed by the taxable person, as the directors act as the representatives of the taxable person. The punishment may be in the form of imprisonment and/or a fine depending on the case.
Statute of limitations. The statute of limitations in Indonesia is five years. The right to collect tax, including interest, fine, surcharge and tax collection expense by the tax authorities shall expire after five years from the taxable period. However, the expiration of tax collection right may be deferred as a result of:
• The issuance of a distress warrant
• There is a recognition of tax debt from the taxable person either directly or indirectly
• The issuance of a notice of tax underpayment assessment
• An investigation on tax crime is conducted