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Indonesia updates tax regulations on ID numbers, mobile credit and luxury goods sales tax

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I Dewa Made Agung Nugraha and Erviyanti of GNV Consulting discuss the amendments to taxpayer ID numbers, VAT on cellular phones and luxury goods sales tax.

Single identity number and/or taxpayer ID number in public services

To support the implementation of public services to citizens in fulfilling their fundamental rights and needs, on September 9 2021 the President of the Republic of Indonesia published and enforced Presidential Decree No. 83 of 2021 (Perpres 83) which governs “Inclusion and utilisation of the single identity number (NIK) and/or taxpayer ID number (NPWP) in the fields of public services”.

The inclusion of NIK and/or NPWP is carried out with the following conditions:

  • NIK as an identity marker for individuals who do not have an NPWP;

  • NPWP is used as an identity marker for foreign entities or persons that do not have a NIK; and

  • NIK and NPWP are used as identity markers for individuals who already have an NPWP. 

Service recipient data that has been completed with validation of NIK and/or NPWP can be shared and utilised for:

  • Prevention of criminal acts of corruption;

  • Prevention of money laundering;

  • Taxation purposes;

  • Updating of identity data in the population data; and

  • Other purposes in accordance with the provisions of the legislation.

Value-added tax and income tax on cellular phones

On September 1 2021, the Directorate General of Taxes (DGT) stipulate Regulation No. PER-18/PJ/2021 (PER-18) regarding “Implementation instruction for collecting VAT and income tax on income/delivery in connection with selling of cellular phone prepaid credit and SIM card starter pack”.

The main points of PER-18 are summarised as follows:

(1) Delivery of cellular phone prepaid credit and starter pack SIM card by:

  • Telecommunication service provider entrepreneur (TSPE) to a distribution operator (DO) and/or telecommunication consumer shall be subject to VAT which is collected by the TSPE;

  • DO of level one to DO and/or telecommunication consumer shall be subject to VAT which is collected by the DO of level one;

  • DO of level two to DO and/or telecommunication consumer shall be subject to VAT which is collected by the DO of level two;

  • DO of the next level to DO and/or telecommunication consumer shall be subject to VAT which is collected by the DO of level two. 

(2) Sales of cellular phone prepaid credit and SIM card starter pack by DO of the second level shall be subject to Article 22 WHT of 0.5%.

(3) Collection of Article 22 WHT shall not apply on payment by DO and/or telecommunication consumers in the following cases:

  • With a maximum amount of Rp2,000,000 ($141,841) excluding VAT and not a split payment of a transaction of which the actual value is more than Rp2,000,000;

  • Banking taxpayer;

  • Already hold and file a copy of income tax certificate based on PP-23/2018, and it is already verified by the information system of the DGT;

  • Already hold and file a copy of letter of exemption from Article 22 WHT in accordance with the provisions;

  • Runs other businesses in addition to selling cellular phone prepaid credit and SIM card starter pack, and placed a deposit with a maximum amount of Rp60,000,000  excluding VAT in one tax period.

Luxury goods sales tax incentive on cars

On September 13 2021, the Minister of Finance (MoF) issued a new Regulation No. 120/PMK.010/2021 (PMK-120) as the second amendment of PMK-31 concerning luxury goods sales tax (LST) incentive on cars.

The highlights of PMK-120 are as follows:

  • LST which is payable on the delivery of automotive vehicles in the form of sedan or station wagon and automotive vehicles for transportation of fewer than 10 persons including the driver, other than a sedan or station wagon whose cylinder content capacity is up to 1,500 cc  and already meeting specific criteria, shall be 100% borne by the government;

  • LST which is payable on the delivery of automotive vehicles for transportation of fewer than 10 persons including the driver other than a sedan or station wagon with cylinder content capacity of more than 1,500 cc up to 2,500 cc and already meeting specific criteria shall be 50% borne by the government;

  • LST which is payable on the delivery of automotive vehicles for transportation of fewer than 10 persons including the driver other than a sedan or station wagon, with two axle drive (4x4) system with cylinder content capacity of more than 1,500 cc up to 2,500 cc and already meeting specific criteria shall be 25% borne by the government.

Entrepreneurs that have already created the September period tax invoices for the delivery of automotive vehicles shall replace the tax invoices using the new rates above. Any excess VAT payment, on the other hand, must be returned to the customers.

This facility of LST borne by the government applies from September to December 2021.

 
I Dewa Made Agung Nugraha

Partner, GNV Consulting

E: dewa.nugraha@gnv.id

 

Erviyanti

Manager, GNV Consulting

E: erviyanti.adam@gnv.id


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