Value Added Tax

General

Value Added Tax (VAT) is typically due on events involving the transfer of taxable goods or the provision of taxable services in the Indonesian Customs Area. The taxable events are:

a. Deliveries of taxable goods in the Customs Area by an enterprise;

b. Import of taxable goods;

c. Deliveries of taxable services in the Customs Area by an enterprise;

d. Use or consumption of taxable intangible goods originating from outside the Customs Area in the Customs Area;

e. Use or consumption of taxable services originating from outside the Customs Area in the Customs Area;

f. Export of taxable goods (tangible and intangible) by a taxable enterprise.

g. Export of taxable services by a taxable enterprise.

The VAT obligations arise upon the above deliveries with the value exceeding Rp 4.8 billion per annum.

The delivery of taxable goods is defined very broadly; it includes the following:

a.Deliveries of a title to taxable goods according to an agreement;

b.Transfers of taxable goods according to a hire-purchase or a finance-lease agreement;

c.Deliveries of taxable goods to an intermediary trader or through an auction official;

d.Own-use and/or free gift of taxable goods;

e.Remaining taxable goods in the form of inventories and/ or assets, which were originally not for sale, upon a company’s dissolution;

f.Deliveries of taxable goods within a company (e.g., between branches, or between the head office and its branches) unless the company, subject to the DGT’s approval, centralises its VAT reporting;

g.Deliveries of taxable goods on consignment;

h.Deliveries of taxable goods by a taxable entrepreneur in the framework of sharia-based financing, whereby the deliveries are deemed to take place directly from the taxable entrepreneur to the party in need of the taxable goods.

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