Exemption or Relief of Import Duty and or Exemption of VAT on Imported Goods in the Framework of Contract of Work
- September 16, 2019
- Posted by: Administrator
- Category: Consultant, Tax News

The Government of Indonesia, through the Minister of Finance (MoF), issued Regulation No.116/PMK.04/2019 (“PMK-116”) on 13 August 2019 concerning the Exemption or Relief of Import Duty and/or Exemption of VAT on Imported Goods in the Framework of Contract of Work or Coal Mining Enterprise Work Agreement. With the issuance of this PMK-116, the previous regulation, i.e. PMK-259/PMK.04/2016, is revoked and declared invalid.
The essence of PMK-116 is summarized as follows:
The MoF provides a facility for exemption or relief of import duties on imported goods and/or exemption of VAT on imports of Taxable Goods (BKP) in the framework of Contract of Work (KK) or Work Agreement between the Government and Coal Mining Entrepreneurs (PKP2B) conducted by Contractors that meet the required criteria as follows:
Exemption or Relief Given in Accordance with the Period Specified in the Contract | Exemption or Relief Given from the Date of Signing the Contract until the 10th Year of the Production Operation Period | Exemption or Relief Given until the End of the Contract Period | Exemption or Relief Given from the Date of Signing the Contract until the 10th Year of the Production Operation Period |
Contractor whose contract includes provisions regarding the granting of exemption or relief of import duties on imported goods in the framework of KK or PKP2B; and | Contractor whose contract includes provisions regarding the granting of exemption or relief of import duties on imported goods in the framework of KK or PKP2B; and | Contractor of PKP2B whose contract was signed before 1990; | Contractor whose contract includes provisions regarding the granting of exemption or relief of import duties on imported goods in the framework of KK or PKP2B as long as it meets the statutory provisions. |
Contractor whose contract includes provisions regarding the period for granting exemption or relief of import duties on imported goods in the framework of KK or PKP2B. | Contractor whose contract does not include provisions regarding the period for granting exemption or relief of import duties on imported goods in the framework of KK or PKP2B.
|
Contractor of PKP2B whose contract includes provisions regarding the granting of exemption or relief of import duties on imported goods in the framework of PKP2B; | Contractor whose contract does not include provisions regarding the granting of the VAT exemption for imports of BKP in the framework of KK or PKP2B; or |
The Contractor whose contract includes provisions regarding the granting of the VAT exemption for the import of BKP in the framework of KK or PKP2B; and | Contractor whose contract includes provisions regarding the granting of the VAT exemption for the import of BKP in the framework of KK or PKP2B; and | Contractor of PKP2B whose contract does not include provisions regarding the period for granting exemption or relief of import duties; and | Contractor whose contract includes provisions regarding the granting of the VAT exemption for imports of BKP in the framework of KK or PKP2B as long as it meets the statutory provisions. |
Contractor whose contract includes provisions regarding the period for granting VAT exemption for the import of BKP in the framework of KK or PKP2B. | Contractor whose contract does not include provisions regarding the period for granting VAT exemption for the import of BKP in the framework of KK or PKP2B. | Contractor of PKP2B whose imported goods are State Property. |
Imported goods that obtain facilities can be transferred, re-exported, or destroyed by fulfilling the following requirements.
- Transfer of the imported goods that obtain facilities can be done after 2 (two) years from the date of customs import declaration and after obtaining a transfer permit issued by the Head of Customs Office;
- Imported goods that obtain facilities can be re-exported by submitting a customs export declaration to the Customs Office; and
- Destruction of imported goods that obtain facilities can be done after 2 (two) years from the date of customs import declaration and after obtaining a transfer permit issued by the Head of Customs Office. In addition, the destruction of the imported goods that obtain facilities is only carried out on goods that have no economic value.
If the transfer, re-export, and/or destruction are carried out without fulfilling the requirements, the imported goods that obtain facilities are subject to import duty, VAT and/or administrative sanctions in accordance with statutory provisions in the field of customs and/or taxation.
PMK-116 will become effective on 11 October 2019 (60 days from the date this regulation was announced).