The latest VAT facility in Indonesia

The Indonesian government recently proposed four types of new fiscal incentives in response to the outbreak of COVID-19. The government hopes the new fiscal incentives can help contain the economic impact of COVID-19 outbreak. A VAT incentive is included the incentives.

Minister of Finance (MoF) Regulation No. 23/PMK.010/2019 (PMK-23), which became applicable on 1 April 2020, provides that the government will automatically deem the following registered taxable entrepreneurs (PKP) as low risk and, as a result, they are eligible for a preliminary VAT refund facility (previously these types of PKP had to apply to be considered low risk with respect to the VAT refund facility):

Those whose business classification (KLU) stated in their 2018 Corporate Income Tax Return (CITR) is among those listed in Attachment F of PMK-23; or
Those who have been declared a company granted with KITE, which is a facility granted to companies that import goods and/or materials to be processed, assembled, or fitted on other goods to produce export goods.

The amount of preliminary VAT refunds available for these taxpayers has been increased from IDR 1 billion to IDR 5 billion.

PKP that meet the above criteria do not need to submit an application for the VAT refund facility – they are automatically entitled to it. Moreover, the Directorate General of Taxation (DGT) does not need to declare the PKP as low risk as long as the KLU or KITE status is valid when the refund request is submitted. This facility is valid for VAT returns (including amendments) for the fiscal periods of April to September 2020, so long as the returns are submitted no later than 31 October 2020.

Irwan Kusumanto
ikusumanto@bdo.co.id

Ahmad Taufiq
ataufiq@bdo.co.id