VATupdate

Share this post on

Ability to claim input VAT is broadened, New tax provisions for the digital economy

Interest WHT rate reduction

The interest WHT rate will be reduced from 20%. The new rate, and whether it would apply to all forms of borrowing, is yet to be determined.3 Interest subject to WHT includes coupons, premiums, discounts, and guarantee fees.

Ability to claim input VAT is broadened

The New Tax Law enables input VAT to be creditable in the following situations:

  • Input VAT is paid by a company prior to the company being registered for VAT.4
  • An incomplete input VAT invoice is received and the invoice contains only the buyer’s name and identification number.
  • Any input VAT which: a) has not been reported in the monthly VAT return but is identified during a tax audit; b) collected by a tax assessment; or c) paid by the company during its pre-operating stage.

 New tax provisions for the digital economy

New VAT collection mechanism for international digital companies for the supply of intangible goods or services from outside Indonesia

Certain international sellers, international service providers, and international and local e-commerce platform provider companies will be required to collect 10% VAT from Indonesian customers. The Ministry of Finance will issue regulations to set out the criteria and mechanics of VAT collection and whether this would be administered directly or via Indonesian agents. It is not yet clear whether the non-Indonesian parties would be full VAT taxpayers or operate on a “payment only” basis

Source EY

Sponsors:

VAT news
VAT news

Advertisements: