PP Number 49 of 2022 concerning Facilities of Exemption from VAT and VAT Not Collected

  • January 12, 2023
  • Posted by: Administrator
  • Category: Tax News
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The Government of Indonesia issued Government Regulation Number 49 of 2022 (‘PP 49/2022’) concerning VAT Exemption and VAT or VAT and Sales Tax on Luxury Goods (‘SLTG’) Not Collected on Import and/or Delivery of Certain Taxable Goods and/or Delivery of Certain Taxable Services and/or Utilization of Certain Taxable Services from Outside the Customs Territory. PP 49/2022 became effective as of 12 December 2022.

This regulation comes into force by revoking several regulations that were previously in force, with details as follows:

  1. PP No. 58 of 2021 – Amendment of PP Number 40 of 2015 concerning delivery of clean water that is   exempted from imposition of VAT;
  2. PP No. 38 of 2003 – Amendment of PP Number 146 of 2000 concerning Import and/or Delivery of Certain Taxable Goods and/or Delivery of Certain Taxable Services that is Exempted from Imposition of VAT;
  3. PP No. 48 of 2020 – Amendment of PP Number 81 of 2015 concerning Import  and/or Delivery of Certain Strategic Taxable Goods that are Exempted from Imposition of VAT;
  4. PP No. 50 of 2019 – Import and Delivery of Certain Means of Transport as well as Delivery and Utilization   of Taxable Services.

The major changes in PP 49/2022 relate to the granting of the facility of VAT exemption or the facility of VAT Not Collected, which are stipulated as follows:

  1. Facility of VAT exemption on delivery of certain BKP/JKP that does not require the use of a Certificate of Exemption (SKB) from VAT, with details as follows:
    • Certain Taxable Goods (BKP) such as polio vaccines or vaccines for handling Covid-19, general textbooks, holy books, religious textbooks, and BKP that is received by a ministry, agency, or institution that handles natural disasters in the central government and regional governments for handing natural disasters and non-natural disasters that are designated as national disasters; and
    • Certain Taxable Services (JKP) such as construction services for the purpose of construction of places of worship, construction of buildings intended for victims of national disasters, and JKP other than construction that is received by a ministry of institution that handles national disasters at the central government or a regional government for handing natural disasters and non-natural disasters that are designated as national disasters.
  2. Facility of VAT exemption on BKP/JKP of a Strategic Nature on activities of import of BKP or delivery of certain BKP/JKP within or from outside the Customs Territory with details as follows:
    VAT Not Collected Facility Types of Strategic BKP/JKP
    Import of Certain Strategic BKP:

    •Types a, j, k, m require SKB PPN

    •Other types do not require SKB PPN

    		 a.Factory machinery and equipment constituting a single unit, whether in assembled or unconnected condition, which is used directly in the process of producing Taxable Goods by the Taxable Entrepreneur that produces the Taxable Goods, including whose import is done by a party that performs integrated construction work, not including spare parts;

    b.Goods that are produced from business activity in the maritime and fisheries fields, whether catch or cultivation, the criteria and/or details of which are as specified in the Attachment to the Government Regulation;

    c.Raw skins and hides, not tanned;

    d.Livestock, the criteria and/or details of which are stipulated through a Ministerial Regulation after receiving considerations from the minister who carries on governmental affairs in the field of agriculture;

    e.Seeds and/or seedlings of agricultural, plantation, forestry, livestock, or fishery goods;

    f.Animal feed as stipulated in the provisions of the laws and regulations in the fields of livestock and veterinary health, not including pet food;

    g.Fish feed that fulfills the general and specific/technical requirements in Import of fish feed as stipulated in the provisions of the laws and regulations in the field of fishery;

    h.Feed ingredients for production of animal feed and the main raw material for fish feed, not including feed additives and feed supplements, the criteria and/or details of which are stipulated through a Ministerial Regulation after receiving the considerations of the minister who carries on governmental affairs in the field of agriculture and the minister who carries on governmental affairs in the field of maritime and fishery affairs;

    i.Raw material for silver handicrafts in the form of silver granules and/or in the form of silver ingots;

    j.Weapons, ammunition, bulletproof helmets and bulletproof jackets or vests, special land vehicles, radar, and spare parts thereof, which are imported by:

    • The ministry or government institution that carries on government affairs in the field of defense or state security;
    • An on-ministry government institution whose position is under and responsible to the President through the coordination of the Chief of the Indonesian National Police and has duties and functions in the field of prevention and eradication of abuse and illegal distribution of narcotics, psychotropics, and their precursors as well as other addictive substances other than addictive substances for tobacco and alcohol; or
    • Another party designated by a ministry or government institution as mentioned in number 1 or number 2 to perform such Import.

    k.Components or materials that are not yet produced domestically, which are imported by a state-owned enterprise operating in the national defense industry that is designated by a ministry or government institution as mentioned in letter j number 1 or number 2, which is used in production of weapons, ammunition, special land vehicles, radar, and their spare parts, which will be delivered to:

    • The ministry or government institution that carries on government affairs in the field of defense or national security; or
    • A non-ministry government institution whose position is under and responsible to the President through the coordination of the Chief of the Indonesian National Police and has duties and functions in the field of prevention and eradication of abuse and illegal distribution of narcotics, psychotropics, and their precursors as well as other addictive substances other than addictive substances for tobacco and alcohol.

    l.Weapons, ammunition, military equipment, and military apparatus owned by other countries which is imported by the Indonesian National Armed Forces in the context of military activities as part of military cooperation in the form of joint military exercises;

    m.Equipment together with its spare parts that is used by the ministry that carries on government affairs in the field of defense or the Indonesian Armed Forces for provision of border data, topographic maps, hydrographic maps, and aerial photographs of the Unitary State of the Republic of Indonesia which is done to support the national defense, which is imported by:

    • The ministry that carries on government affairs in the field of defense;
    • The Indonesian Armed Forces; or
    • A party designated by the ministry that carries on government affairs in the field of defense or the Indonesian Armed Forces.

    n.Special official presidential vehicles imported by the institution of the presidency or a party designated by the institution of the presidency to perform the Import, which are granted exemption from Import Duty;

    o.Goods for the purposes of museums, zoos, and other similar places that are open to the public, as well as goods for natural conservation, which are granted exemption from Import Duty;

    p.Certain goods in the category of basic needs that are urgently needed by the public;

    q.Sugar for consumption in the form of white crystal sugar derived from sugar cane without the addition of flavoring or coloring agents;

    r.Goods resulting from mining or drilling which are taken directly from the source, not including from the output of coal mining, including:

    • Crude oil;
    • Natural gas, in the form of natural gas transmitted through pipelines, not including Natural gas such as LPG that is ready for direct consumption by the public;
    • Geothermal energy;
    • Asbestos, slate, semiprecious stones, limestone, pumice, precious stones, bentonite, dolomite, feldspar, rock salt (halite), granite, granite/andesite, gypsum, calcite, kaolin, leucite, magnesite, mica, marble, nitrate, obsidian, ocher, sand and gravel, quartz sand, perlite, phosphate, talc, fullers earth, diatomic earth, clay, alum, trass, jarosite, zeolite, basalt, trachyte, and sulfur, the limits and criteria of which may be stipulated through a Ministerial Regulation; and
    • Iron ore, tin ore, gold ore, copper ore, nickel ore, silver ore, and bauxite ore;

    s.Liquified natural gas and compressed natural gas;

    t.Goods imported by the central government or a regional government that are intended for the public interest, which are granted exemption from Import Duty;

    u.Medicines that are imported using the state budget or a local government budget for the public interest, which are granted exemption from Import Duty; and

    v.Material for human therapy, blood grouping, and material for tissue classification that are imported using the state budget or a local government budget for the public interest, which are granted exemption from Import Duty.
    Delivery of Certain Strategic BKP:

    • Types a, n, o, p require SKB PPN.
    • Other types do not require SKB PPN

     

    		 a.Factory machinery and equipment constituting a single unit, whether in assembled or unconnected condition, which is used directly in the process of producing Taxable Goods by the Taxable Entrepreneur that produces the Taxable Goods, including whose import is done by a party that performs integrated construction work, not including spare parts;

    b.Goods that are produced from business activity in the maritime and fisheries fields, whether catch or cultivation, the criteria and/or details of which are as specified in the Attachment to the Government Regulation;

    c.Raw skins and hides, not tanned;

    d.Livestock, the criteria and/or details of which are stipulated through a Ministerial Regulation after receiving considerations from the minister who carries on governmental affairs in the field of agriculture;

    e.Seeds and/or seedlings of agricultural, plantation, forestry, livestock, or fishery goods;

    f.Animal feed as stipulated in the provisions of the laws and regulations in the fields of livestock and veterinary health, not including pet food;

    g.Fish feed that fulfills the general and specific/technical requirements in Import of fish feed as stipulated in the provisions of the laws and regulations in the field of fishery;

    h.Feed ingredients for production of animal feed and the main raw material for fish feed, not including feed additives and feed supplements, the criteria and/or details of which are stipulated through a Ministerial Regulation after receiving the considerations of the minister who carries on governmental affairs in the field of agriculture and the minister who carries on governmental affairs in the field of maritime and fishery affairs;

    i.Owned public apartment units whose acquisition is financed through subsidized home ownership credit/ financing that fulfills the following provisions:

    • The area for each residence is not less than 21 m2 (twenty-one square meters) and does not exceed 36 m2 (thirty-six square meters);
    • Its construction refers to a Regulation of the Minister that carries on government affairs in the field of public works and public housing;
    • It is the first residential unit that is owned, is used by the party itself as a residence, and is not transferred within the time period pursuant to the provisions of the laws and regulations in the field of public housing; and
    • The limits related to the selling price of owned public housing apartment units and income of individuals who obtain owned public housing apartment units shall be stipulated by the Minister after receiving the considerations of the minister who carries on governmental affairs in the field of public works and public housing;

    j.Public housing, temporary housing, student dormitories, and worker dormitories, the limits of which shall be stipulated by the Minister after receiving the considerations of the minister who carries on governmental affairs in the field of public works and public housing;

    k.Raw material for silver handicraft in the form of silver granules and/or in the form of silver ingots;

    l.Electricity, including the costs of electrical connection and use of electricity, except for homes with power over 6,600 (six thousand six hundred) ampere voltage;

    m.Clean water;

    • Clean water that is not ready for drinking; and/or
    • Clean water that is ready for drinking (drinking water), not including water that has been treated using special treatment and packaged in bottles or other packaging and that fulfills the requirements as drinking water (refillable drinking water).

    n.Weapons, ammunition, bulletproof helmets and bulletproof jackets or vests, special land vehicles, radar, and spare parts thereof, which are delivered to:

    • The ministry or government institution that carries on government affairs in the field of defense or state security;
    • A non-ministry government institution whose position is under and responsible to the President through the coordination of the Chief of the Indonesian National Police and has duties and functions in the field of prevention and eradication of abuse and illegal distribution of narcotics, psychotropics, and their precursors as well as other addictive substances other than addictive substances for tobacco and alcohol.

    o.Components or materials that are acquired by a state-owned enterprise operating in national defense industry that is designated by a ministry or government institution as mentioned in letter n number 1 or number 2 for production of weapons, ammunition, special land vehicles, radar, and their spare parts, which will be delivered to:

    • The ministry or government institution that carries on government affairs in the field of defense or national security; or
    • A non-ministry government institution whose position is under and responsible to the President through the coordination of the Chief of the Indonesian National Police and has duties and functions in the field of prevention and eradication of abuse and illegal distribution of narcotics, psychotropics, and their precursors as well as other addictive substances other than addictive substances for tobacco and alcohol.

    p.Equipment together with its spare parts that is used by the ministry that carries on government affairs in the field of defense or the Indonesian Armed Forces for provision of border data, topographic maps, hydrographic maps, and aerial photographs of the Unitary State of the Republic of Indonesia which is done to support the national defense, which is delivered to the ministry that carries on government affairs in the field of defense or the Indonesian Armed Forces;

    q.Certain goods in the category of basic needs that are urgently needed by the public. The criteria and/or details of the types of certain goods in the category of basic needs that are urgently needed by the public are set forth in the Attachment, which constitutes an inseparable part of this Government Regulation;

    r.Sugar for consumption in the form of white crystal sugar derived from sugar cane without flavoring or coloring agents;

    s.Goods resulting from mining or drilling which are taken directly from the source, not including from the output of coal mining, including:

    • Crude oil;
    • Natural gas, in the form of natural gas transmitted through pipelines, not including natural gas such as LPG that is ready for direct consumption by the public;
    • Geothermal energy;
    • Asbestos, slate, semiprecious stones, limestone, pumice, precious stones, bentonite, dolomite, feldspar, rock salt (halite), granite, granite/andesite, gypsum, calcite, kaolin, leucite, magnesite, mica, marble, nitrate, obsidian, ocher, sand and gravel, quartz sand, perlite, phosphate, talc, fullers earth, diatomic earth, clay, alum, trass, jarosite, zeolite, basalt, trachyte, and sulfur, the limits and criteria of which may be stipulated through a Ministerial Regulation;
    • Iron ore, tin ore, gold ore, copper ore, nickel ore, silver ore, and bauxite ore;

    t.Liquified natural gas and compressed natural gas.
    Delivery of certain strategic JKP within the Customs Territory and utilization of certain strategic JKP from outside the Customs Territory:

    • Types a through n do not require SKB PPN
    • Type m requires SKB PPN

     

    		 a.Medical health care services (individual, public, animal/veterinary);

    b.Certain social services performed by the central government, regional government, or non-profit organizations, including:

    • Orphanage and old age home services;
    • Fire fighting;
    • Provision of assistance in accidents;
    • Rehabilitation institutions;
    • Provision of mourning houses or burial services, including crematorium services; and
    • In the field of sports;

    c.Service of delivery of letters using postage stamps or other means in lieu of postage stamps;

    d.Financial services including:

    • Collecting funds from the public in the form of demand deposit, term deposit, certificate of deposit, savings, and/or other equivalent forms;
    • Placing funds, borrowing funds, or lending funds to other parties using letters, means of telecommunication or sight draft, cheque, or other means;
    • Financing, including financing based on sharia principles, in the form of:

    oLeasing with option rights;

    oFactoring;

    oCredit card business; and/or

    oConsumer financing;

    • Disbursement of loans on the legal basis of collateral, including sharia and fiduciary pledges; and
    • Underwriting;

    e.Insurance services, including services of:

    • Loss insurance;
    • Life insurance; and
    • Reinsurance.

    Insurance services that are exempted from imposition of VAT are not included as insurance support services.

    f.School and non-school education services;

    g.Non-commercial broadcasting services are activities of broadcasting public service messages or a series of public service messages in the form of voice, images, or voice and images or in the form of graphics, characters, whether interactive or not, that can be received through broadcast receiving devices and are delivered by a broadcasting institution to placers of messages or to placers of messages through an advertising company, production house, or other party;

    h.Public transport services on land and on waters as well as domestic air transport service that is an inseparable part of foreign transport services.

    Public transport services on waters do not include transport services that fulfill the following provisions:

    • There is a vessel lease or charter agreement; and/or
    • A vessel is used only to transport cargo owned by one (1) party and/or to transport passengers in one (1) journey;

    i.Manpower services, including:

    • Manpower;
    • Provision of manpower; and
    • Conducting training for manpower.

    The manpower provision services as mentioned above must fulfill the following criteria:

    oThe manpower placement and distribution entrepreneur only places manpower with users of manpower that are not associated with provision of other Taxable Services, such as technical services, management services, consulting services, business management services, loading/unloading services, and/or other services;

    oThe manpower provider entrepreneur does not make payment of salary, wages, honorarium, benefits, and/or the like to the manpower that are provided;

    oThe manpower provider entrepreneur is not responsible for the results of work of the manpower who are provided after they are delivered to the user of the manpower services; and

    oThe manpower who are provided are included in the personnel structure of the user of the manpower services;

    j.Public telephone services using coins;

    k.Delivery services using postal money order;

    l.Services of leasing of public apartments and public housing; and

    m.Services received by the ministry that carries on government affairs in the field of defense or the Indonesian Armed Forces that are utilized for the purpose of provision of boundary data, topographic maps, hydrographic maps, and aerial photographs of the territory of the Unitary State of the Republic of Indonesia to support the national defense.

    The provisions regarding factory machinery and equipment whose VAT is exempted shall be further stipulated through a Regulation of the Minister of Finance.

  3. The facility of VAT Not Collected on Import and/or Delivery of Strategic BKP/JKP on activities of import of BKP or delivery of certain BKP/JKP, with the details as follows:
    VAT Not Collected Facility Types of Strategic BKP/JKP
    Import of Certain Strategic BKP a.  Means of transport on waters, means of transport under water, means of transport in air, and trains, as well as their spare parts, shipping safety devices and human safety devices, and aviation safety devices and human safety devices that are imported the by ministry or government institution that carries on government affairs in the field of defense or national security or imported by another party that is appointed by the ministry or government institution that carries on government affairs in the field of defense or national security to perform such Import;

    b.  Sea transport vessels, river transport vessels, lake transport vessels, and ferries, fishing ships, pilot ships, tugboats, barges, as well as their spare parts, vessel apparatus, shipping safety devices, and human safety devices that are imported and used by a national commercial shipping company, national fishing company, national harbor service operator company, and national river, lake and ferry transport service operator company in accordance with their business activities;

    c.  Aircraft and their spare parts, aviation safety devices and human safety devices, and equipment for repair and maintenance that are imported and used by a national commercial air transport business entity;

    d.  Aircraft spare parts as well as equipment for aircraft repair and maintenance that are imported by a party assigned by a national commercial air transport business entity and that are used in the context of provision of aircraft maintenance and repair services to a national commercial air transport business entity;

    e.  Trains and their spare parts, equipment for repair and maintenance, and railroad infrastructure that are imported and used by a public railroad service operator business entity and/or public railroad infrastructure operator business entity ;

    f.  Components or material imported by a party assigned by a public railroad service operator business entity and/or public railroad infrastructure operator business entity in the context of production of:

    • trains;
    • Spare parts;
    • Equipment for repair and maintenance; and/or
    • Railroad infrastructure,

    That will be used by a public railroad service operator business entity and/or public railroad infrastructure operator business entity; and

    g.Gold ingots other than for the interests of the national foreign exchange reserve.
    Delivery of Certain Strategic BKP a.  Means of transport on waters, means of transport under water, means of transport in air, and trains, as well as their spare parts, shipping safety devices and human safety devices, and aviation safety devices and human safety devices that are delivered to the ministry or government institution that carries on government affairs in the field of defense or national security;

    b.  Sea transport vessels, river transport vessels, lake transport vessels, and ferries, fishing ships, pilot ships, tugboats, barges, as well as their spare parts, vessel apparatus, shipping safety devices, and human safety devices that are delivered to and used by a national commercial shipping company, national fishing company, national harbor service operator company, and national river, lake and ferry transport service operator company in accordance with their business activities;

    c.  Aircraft and their spare parts, aviation safety devices and human safety devices, and equipment for repair and maintenance that are delivered to and used by a national commercial air transport business entity;

    d.  Aircraft spare parts as well as equipment for repair and maintenance of aircraft that are acquired by a party assigned by a national commercial air transport business entity and that are used in the context of provision of aircraft maintenance and repair services to a national commercial air transport business entity;

    e.Trains and their spare parts, equipment for repair and maintenance, and railroad infrastructure that are delivered to and used by a public railroad service operator business entity and/or public railroad infrastructure operator business entity;

    f.Components or materials that are delivered to a party assigned by a public railroad service operator business entity and/or a public railroad infrastructure operator business entity in the context of production of:

    • Tains;
    • Spare parts;
    • Equipment for repair and maintenance; and/or
    • Railroad infrastructure,

    That will be used by a public railroad service operator business entity and/or a public railroad infrastructure operator business entity; and

    g.Gold ingots other than for the interests of the national foreign exchange reserve.
    Utilization of Certain strategic JKP from outside the Customs Territory Service of leasing of aircraft that are utilized by a national commercial air transport business entity.
    Delivery of Certain strategic JKP a.Services received by a national commercial shipping company, national fishing company, national harbor service operator company, and national river, lake and ferry transport service operator company, including the services of:

    • Vessel leasing;
    • Harbor services, including towing service, pilot service, mooring service, and docking service; and
    • Ship maintenance and repair;

    b.Services received by a national commercial air transport business entity, including:

    • Aircraft leasing; and
    • Aircraft maintenance and repair;

    c.Train maintenance and repair services received by a public railroad service operator business entity.

     
  4. The facility of VAT Not Collected on import of certain Taxable Goods that are exempted from collection of Import Duty, with the details as follows:
  • Parcels of gifts for the purposes of public worship, charity, social or cultural purposes by an entity or institution in the fields of public worship, charity, social or cultural fields that is domiciled in the territory of the Unitary State of the Republic of Indonesia, whose establishment is in accordance with the provisions of the laws and regulations, and is of a non-profit nature;
  • Goods for the purposes of scientific research and development by a university, ministry or government institution that conducts activities of scientific and technological research and/or development, or an entity or institution with legal entity status that carries on business activity, one of whose activities is conducting research or experiments with the aim of scientific or technological improvements or developments in accordance with the provisions of the laws and regulations;
  • Goods for the special purposes of persons with disabilities by a social welfare entity or institution that handles persons with disabilities;
  • Caskets or other containers containing human remains or ashes;
  • Personal effects of Indonesia manpower working abroad, students studying abroad, civil servants, members of the Indonesian Armed Forces, or members of the Indonesian National

Police who are assigned overseas for not less than one (1) year, if such goods are not to be traded and receive a recommendation from the local diplomatic representative of the Republic of Indonesia;

  • Personal effects of passengers, transport crews, border crossers, and parcels up to a certain quantity in accordance with the provisions of the laws and regulations in the field of customs;
  • Goods under temporary Import in accordance with the provisions of the laws and regulations concerning temporary Import;
  • Goods used by a cooperation contract contractor for upstream oil and gas business activity including exploration and exploitation, or geothermal energy operation activities for indirect utilization including assignments of preliminary survey and exploration, exploration, exploitation, and utilization;
  • Goods that have been exported and are then reimported in the same quality as at the time they were exported;
  • Goods that have been exported for the purposes of repair, work, and testing, and then reimported;
  • Goods and material to be process, assembled, or installed on other goods that obtain an Import facility for export purposes;
  • Goods and materials or machinery that is imported by a micro, small or medium business or industry or a consortium for micro, small, and medium businesses and industries using an Import facility for export purposes;
  • Goods in the context of a cooperation agreement/ coal mining contract of work conducted by a cooperation contract / coal mining contract of work contractor with the following provisions:
    • The contract was signed before 1990;
    • The contract specifies provisions concerning granting of exemption from or reduction of Import Duty on the Import of goods in the context of the cooperation agreement/ coal mining contract of work;
    • The contract does not specify provisions concerning the time period of granting of the exemption or reduction of Import Duty; and
    • The imported goods are goods owned by the state; and
  • Parcels of gifts/donations for the purposes of mitigating natural disasters that are proposed by:
    • An entity or institution operating in the fields of public worship, charity, social or cultural fields;
    • The central government and regional governments; or
    • International institutions or foreign non-government institutions.

5. Input VAT in connection with delivery of BKP/JKP that is exempted from imposition of VAT cannot be credited.

6. Input VAT in connection with delivery of BKP/JKP on which VAT is not collected may be credited if it fulfills the provisions on crediting of Input Tax in the laws and regulations in the field of taxation.

7. In the event there is a transaction which is granted exemption from imposition of VAT or not collecting VAT, but the VAT has already been collected or paid, then:

For the seller Taxable Entrepreneur:

  1. The VAT that was collected must be deposited to the state treasury; and
  2. The Input Tax paid by the seller Taxable Entrepreneur on acquisition of Taxable Goods and/or Taxable Services, Import of Taxable Goods, as well as utilization of intangible Taxable Goods from outside the Customs Territory within the Customs Territory and/or Utilization of Taxable Services from outside the Customs Territory in connection with a delivery:
    • That should have been exempted from imposition of VAT, may not be credited; or
    • Whose VAT should not have been collected, may be credited if it fulfills the provisions on crediting of Input Tax in the laws and regulations in the field of taxation.

8. Carbon Tax shall be settled thru self-payment by the Taxpayer or collection by a Carbon Tax Collector;

9. A Taxpayer who is a subject of Carbon Tax must submit an Annual Tax Return to declare the calculation and/or payment of Carbon Tax;

10. Carbon Tax Collectors must submit  Monthly Tax Returns to declare the calculation and/or payment of Carbon Tax.

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