Government Revises VAT free Goods Regulations

Jakarta, CNN Indonesia – The Ministry of Finance (Kemenkeu) reorganizes the subject and object of receiving facilities that are exempt from Value Added Tax (VAT). This provision is contained in the Ministry of Finance Regulation Number 115/PMK.03/2021 which is effective from September 1, 2021.

The revision was carried out based on Government Regulation (PP) Number 48 of 2020 concerning Amendments to Government Regulation Number 81 of 2015 concerning the Import and/or Delivery of Certain Strategic Taxable Goods Exempted from the Imposition of Value Added Tax.

There are several revisions to the subject and object of the recipient of the VAT exemption facility.

First, the Engineering, Procurement, and Construction (EPC) Contractor is exempt from VAT on the import or delivery of machinery and factory equipment which is constitutes as a whole unit.

Second, liquefied natural gas also got exemption from VAT.

Third, adding a provision that the cost of electricity connection and the cost of electricity loads are included in the definition of electricity which is exempt from the imposition of VAT.

Fourth, expand the definition of machinery and factory equipment including power generation units which are an integrated part of the processing industry that has a business license to supply electricity.

Director of Extension, Services and Public Relations of the Ministry of Finance Neilmaldrin Noor stated that this provision also includes procedures for providing facilities that are exempt from the imposition of VAT as well as payment of certain strategic BKP VAT.

“This is intended to provide convenience in doing business and provide legal certainty,” said Neilmadrin in an official statement, quoted Thursday (2/9).

For machinery and factory equipment to be exempted from VAT, entrepreneurs must apply for a Certificate of Exemption (SKB) through the Indonesia National Single Window (SINSW) System.

Then the issuance of the VAT SKB will be automated with the existing system at the Directorate General of Customs and Excise, the Ministry of Investment, and the National Single Window Institution.

Furthermore, the procedure for VAT exemption on the submission of Simple Owned Flats can be carried out through the developer application system at the Ministry of Public Works and Public Housing (PUPR).