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.