• Export of taxable goods (tangible or intangible) and/or taxable services by a taxable entrepreneur
• 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 the use of others
• Deliveries of assets not originally acquired for sale; an exemption applies if the input tax on the acquisition cannot be credited because the purchase was not related to business or because it was a purchase of a sedan or station wagon
• The definition of delivery of taxable goods excludes delivery of taxable goods under a consignment
• 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 entrepreneur”)
– The purpose of taxable goods is “delivery for a capital contribution to a company” as defined by the VAT law
Effective use and enjoyment. To avoid instances of non-taxation or double taxation, jurisdictions can apply “use and enjoyment” rules that allow a service that is “used and enjoyed” in the jurisdiction to be taxed or prevent a service that is “used and enjoyed” outside the jurisdiction from being taxed. If a service is taxed in the jurisdiction under the “use and enjoyment” provisions, a non-established supplier of the service may be required to register for VAT in every jurisdiction where it has customers that are not taxable persons. In Indonesia, no services are subject to the “use and enjoyment” provisions.
Transfer of a going concern. Normally the sale of the assets of a VAT-registered or VAT-registrable business will be subject to VAT at the appropriate rate. However, a transfer of a business as a going concern (TOGC) may be outside the scope of the tax under certain conditions. A TOGC is the sale of a business or part of a business capable of separate operation, including assets. Where the sale meets the conditions, the supply is treated as outside the scope of VAT. In Indonesia, a TOGC is referred to as a transfer of taxable goods, and when to the effect of a merger, amalgamation, expansion, demerger and business takeover, as well as transfer of taxable goods for the purpose of paying for capital in lieu of shares, provided that the transferor and the transferee are taxable persons, the transaction is excluded in the definition of delivery of taxable goods (i.e., is treated as outside the scope of VAT). A “demerger” is defined as a separation of businesses as referred to in the law that governs limited liability companies.
The specific VAT treatment of a transfer of taxable goods to the effect of a merger, amalgamation, expansion, demerger and business takeover, as well as a transfer of taxable goods for the purpose of paying for capital in lieu of shares, is as follows:
• Where the transaction is between a taxable person and another taxable person, it is excluded from the definition of delivery of taxable goods; thus no VAT is payable.
• An entrepreneur who has not been, or is not confirmed to be, a taxable person is included in the definition of delivery of taxable goods; thus, VAT is payable but not collected by that entrepreneur because it has not been, or is not confirmed to be, a taxable person. Or
• A taxable person to an entrepreneur who has not been, or is not confirmed to be, a taxable person is included in the definition of the delivery of taxable goods; thus VAT is payable and must be collected by the taxable person. In the event that the transferred taxable goods are in the form of assets, which according to their original purpose are not for sale, then the VAT to be imposed on the transfer of taxable goods is in accordance with the provisions that govern the delivery of taxable goods in the form of assets, which according to their original purpose are not for sale.
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 individual 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 meet the threshold could be appointed by or submit notification to the DGT to be appointed as VAT Collectors 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 prescribed by the DGT. For individual entrepreneurs, they have to bring an ID card (for Indonesian citizens) or copy of their passport, a limited stay permit (Kartu Izin Tinggal Terbatas [KITAS]) or a permanent stay permit (Kartu Izin Tinggal Tetap [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 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 a temporary deactivation of a taxable entrepreneur account and is not conveying clarification or conveying clarification but rejected.
• The taxable entrepreneur who, based on field examination, results in the context of the activation of a taxable entrepreneur account that 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 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 taxable 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 that the change relates to the
• 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 services 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 the 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 deducting 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 the Indonesian Customs Area or within the Indonesian Customs Area before the entrepreneur is confirmed as a taxable entrepreneur, can be credited by the taxable entrepreneur using the input tax’s crediting guidelines of 80% of the output tax that should be levied.
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 indicated 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 that 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 bullet three above, 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 that 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 bullet five above is issued before the date of the tax invoice serial number 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 to not have been issued.
• The cancellation of an incomplete tax invoice and the issuance of a new tax invoice as described in bullets five and six above 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 received notification of verification results.
• The late issued tax invoice as described in bullet six above 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 provided by the Directorate General of Taxes, called e-Faktur. The e-Faktur provides electronic signatures in the form of QR codes.
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 cancellation 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 in Indonesia for all taxable persons.
Scope of electronic invoicing. For B2B, B2C, and business-to-government (B2G) supplies, electronic invoicing is mandatory for all taxable persons in Indonesia. There is no threshold beyond which taxable persons are required to adopt electronic invoicing 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 tax invoices to be processed and issued electronically via the government hosted e-Faktur platform.
Electronic invoices must be created and uploaded using the e-Faktur platform to obtain DGT approval. The uploading of electronic tax invoices to the e-Faktur platform must be carried out no later than the 15th of the following month after the date of the electronic tax invoice. An electronic tax invoice that does not obtain DGT approval is not considered as a tax invoice.
Taxable persons who supply taxable goods and/or taxable services are obliged to collect the VAT payable and prepare tax invoices as proof of VAT collection. Tax invoices must include information regarding the delivery of taxable goods and/or taxable services. Tax invoices issued by taxable persons upon delivery of taxable goods and/or taxable services must be in electronic form. Taxable persons who deliver taxable goods and/or taxable services to taxable goods’ buyers and/ or taxable services’ recipients with final consumer characteristics can issue a tax invoice without including information regarding the identity of the buyer and the name and signature of the seller.
Tax invoices must be issued by taxable persons for:
• Deliveries of taxable goods and/or taxable services within the Indonesia Customs Area done in the course of business by a taxable person
• Export of taxable goods (tangible or intangible) and/or taxable services by a taxable person
Tax invoices must be made at the following times:
• Delivery of when supplying taxable goods and/or taxable services
• Receipt of payment if that receipt of payment occurs before delivery of taxable goods and/or taxable services
• Receipt of term payment in case of partial delivery of work stages
• Exporting tangible taxable goods, intangible taxable goods and/or taxable services
• Other times regulated by the provisions of laws and regulations in the field of VAT
Taxable persons can issue one tax invoice that includes all deliveries of taxable goods and/or taxable services made to the same taxable goods’ buyer and/or taxable services’ recipient for one calendar month. The tax invoice is called a combined tax invoice. The combined tax invoice must be made no later than the end of the month of delivery of the taxable goods and/or taxable services.
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 businesses. 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 visits 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 allowed in Indonesia. It is only allowed in relation to the usage of selfproduced 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” (Pemberitahuan Ekspor Barang [PEB]) documents, issued by the customs office, for goods that have been approved for loading. The identity of the exporter stated in the PEB documents 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 IDR and be in the Bahasa Indonesia language. English language and USD currency are permitted, provided approval from the DGT has been obtained through submitting a request using a format prescribed by the DGT. Bookkeeping is a recording process that is carried out regularly to collect the financial data and information, including assets, liabilities, capitals, incomes and costs, as well as the total acquisition and delivery prices of goods or services, which is closed by preparing the financial statements in the form of balance sheets, and the income statements for the period of the relevant fiscal year.
In Indonesia, examples of what records must be held for VAT purposes include books, records, and documents on which the bookkeeping or recording is based, and other documents including the results of data processing from the electronically managed bookkeeping or by online application programs.
In Indonesia, VAT books and records must be held within the country. This should be at the place of activity or the residential place of individual taxable person, or at the place of domicile of corporate taxable person.
Record retention period. VAT documents (both hard copy and electronic documents) must 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. Electronic archiving is allowed in Indonesia. 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 the 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 following 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 IDR through an ID billing created in the DGT’s website. The payment can be settled by bank transfer using the billing code written in the ID billing or the taxable person can settle the payment through a bank teller by informing the teller of the billing code.
Electronic filing. Electronic filing is mandatory in Indonesia for all taxable persons. The VAT return submission platform has been integrated with the electronic invoicing platform. The VAT
return must be submitted electronically via the DGT online or the 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 electronically 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 delivered 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 contractors 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. A 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 Direktorat Jenderal Pajak (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 overpayment, 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 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.