The latest value added tax facility in Indonesia

In Indonesia, registered taxable entrepreneurs (PKP) must collect Value Added Tax (VAT) on a self-assessment basis on delivery of taxable goods and/or services, including any taxable services rendered overseas. However, to improve the Indonesian economy, the Ministry of Finance (MoF) through the Directorate of Taxes (DoT), recently issued a tax regulation on export of Taxable Services. The purpose of the new regulation is to encourage exports of services and to foster competitiveness within the Indonesian services industry.

Under MoF regulation No. 32/PMK.010/2019, which became applicable on 29 March 2019, several services rendered by PKP to persons and businesses overseas are subject to 0% VAT, including:

  a. Tolling services;

  b. Repair and maintenance services;

  c. Freight forwarding related to goods for export; and

  d. Taxable services related to deliverables to be utilised overseas, such as:

1. Technology and information services;
2. Research and development services;
3. Transportation rental services involving rental of aircraft and/or vessel for international aviation or shipping activity;
4. Business and management consulting services, legal consulting services, architecture and interior design consulting services, human resources consulting services, engineering consulting services, marketing consulting services, accounting or bookkeeping services, financial statement audit services, and tax services;
5. Trade services related to sourcing goods overseas for sellers for export purposes; and
6. Interconnection, satellite operation, and/or data communication/connectivity services.

The expansion of the export of service sector that are now subject to this preferential rate shows the government's commitment to broadening the opportunities for Indonesian exports services.

Irwan Kusumanto
ikusumanto@bdo.co.id

Hutomo Pratama Yeputra
hyeputra@bdo.co.id

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