Companies and individuals designated as taxable enterprises (Pengusaha Kena Pajak/PKP) are required to report their business activities and settle the VAT liabilities on these every month. VAT is usually to be accounted for on a decentralization basis. As a result, a company carrying out business activities through a number of business units (branches) in the jurisdiction of different district tax service offices (Kantor Pelayanan Pajak/KPP) must register each unit with the relevant KPP. It is in this context that internal deliveries of taxable goods within a company are subject to VAT.

However, a company may centralise its VAT reporting and exclude internal deliveries of taxable goods from the scope of VAT by submitting a written notification to the DGT. Companies registered with the following KPP are required to centralise their VAT reporting:

a. KPP for large taxpayers/LTO;

b. KPP for foreign investment companies (Penanaman Modal Asing/PMA);

c. KPP for certain foreign companies and foreigners (Badan dan Orang Asing/Badora);

d. KPP for listed companies (Perusahaan Masuk Bursa/

PMB); and

e. KPP for medium-sized taxpayers/MTO.