Tax update December 2024 - BATS Tax Update

Minister of Finance Regulation of the Republic of Indonesia Number 131 of 2024 concerning Value-Added Tax Treatment on the Import of Taxable Goods, Delivery of Taxable Goods, Delivery of Taxable Services, Utilization of Intangible Taxable Goods from Outside the Customs Area within the Customs Area, and Utilization of Taxable Services from Outside the Customs Area within the Customs Area.

In the New Year, the Government has issued a new Minister of Finance Regulation at the end of 2024, explaining the implementation of the 12% VAT rate scheme effective from January 1, 2025.

This regulation stipulates that the import of Taxable Goods (BKP) and/or the delivery of Taxable Goods within the Customs Area are subject to 12% VAT, calculated from the Tax Base (DPP), which is the selling price or import value. Taxable Goods using the Tax Base in the form of selling price or import value are luxury goods, such as motor vehicles and non-motor vehicles, subject to Luxury Goods Sales Tax (PPnBM) under PMK 16/PMK.03/2023 and PMK 42/PMK.010/2022.

Meanwhile, imports and/or deliveries of Taxable Goods within the Customs Area, other than those subject to PPnBM, are subject to 12% VAT. However, the Tax Base is determined as an alternative value, calculated as 11/12 of the import value, selling price, or reimbursement.

Taxable Entrepreneurs (PKP) who collect, calculate, and remit VAT on the delivery of Taxable Goods or Services based on an alternative value or specific fixed amounts are exempted from this provision.

The final provisions of this regulation explain the following rules for PKPs delivering luxury Taxable Goods:

1.         From January 1 to January 31, 2025, the VAT payable is calculated at a rate of 12% on a Tax Base of 11/12 of the selling price.

2.         Starting February 1, 2025, the VAT rate of 12% applies to a Tax Base of the full selling price or import value.

With the enactment of this regulation, the effective VAT paid by the public remains 11%. An example of the calculation is as follows:

•           Selling price of goods: Rp 1,000,000

•           Previous VAT:

= Rp 1,000,000 x 11% = Rp 1,110,000

•           Under the new rule:

= Rp 1,000,000 x 11/12 x 12% = Rp 1,110,000

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Announcement Number PENG-38/PJ.09/2024 on Notification of the
Pre-Implementation of DJP Coretax.

The Directorate General of Taxes (DJP) has announced the pre-implementation phase of Coretax, scheduled from December 16 to December 31, 2024. This phase aims to facilitate a smooth transition for the full implementation of Coretax starting January 1, 2025.

Taxpayers can access DJP Coretax using their DJP Online account credentials by entering their National Identity Number (NIK) or Taxpayer Identification Number (NPWP), phone number or email address, and a captcha code provided on the password recovery page. The system will send a notification containing a link to reset the password via email or SMS.

When resetting the password, taxpayers will also be required to create a password phrase. It is recommended that the password phrase differs from the password, as it will serve as a substitute for a digital signature in Coretax DJP operations.

Taxpayers who successfully create a new password and password phrase will be able to log in to DJP Coretax and access its full range of services starting January 1, 2025.

For taxpayers who do not yet have a DJP Online account or have not linked their NIK and NPWP, they can request digital access and activate their NIK as an NPWP through Coretax DJP starting January 1, 2025.

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Regulation of the Director General of Taxes Number PER-1/PJ/2025 concerning Technical Guidelines for Issuing Tax Invoices in the Implementation of Minister of Finance Regulation Number 131 of 2024

The Directorate General of Taxes issued a regulation derived from Minister of Finance Regulation (PMK) No. 131 of 2024, providing technical guidelines for issuing tax invoices. This follows confusion among the public who prematurely applied a 12% VAT deduction to the selling price or replacement value.

Under this regulation, the public is given a three-month transition period from January 1 to March 31, 2025, to adjust their tax systems. Tax invoices or equivalent documents that include:

a.         Taxable Base derived from the full selling price/replacement value/import value with a 12% rate; or

b.         Taxable Base derived from the full selling price/replacement value/import value with an 11% rate,

are considered valid and will not be subject to penalties.

Regarding over-collection of VAT by 1% due to incorrect taxable base application, the following provisions apply:

a.         The buyer (the VAT payer) may request a refund of the excess VAT collected from the taxable entrepreneur (seller); and

b.         Based on the refund request, the seller must amend or replace the tax invoice or equivalent document.

The regulation also clarifies VAT collection provisions by taxable retail entrepreneurs for luxury taxable goods (LGTG). Specifically:

•           The taxable base (DPP) using an alternative value of 11/12 of the selling price applies only from January 1 to January 31, 2025.

•           Starting February 1, 2025, the VAT due is calculated at a 12% rate based on the selling price as the DPP.