Page 8 - Newsletter (New Tax Facilities on Goods and Services Required to Address COVID-19 and Revision on State Budget)

DDTC Newsletter Vol.03 | No.08 I April 2020 Page 8 of 9

New Tax Facilities on Goods and Services Required to Address
COVID-19 and Revision on State Budget

imported goods may originate from outside the customs Bonded Zone products. In contrast, for KITE exemption
area and other places within the customs area. companies supplying products to KITE IKM companies to
be further processed or assembled with the products, the
The government subsequently defers import duties
supply is exempted from import duties and is not subject
and does not impose taxes on imports on the import of
to VAT and SLTGs.
goods originating from outside the customs area. For
goods originating from other places in the customs areas Both types of companies are also allowed to sell to other
into bonded zones, however, the government provides parties within the customs area with a maximum of
incentives in the form of non-withholding of value added 50% of the realization. For the sale to the other party,
tax (VAT) and Sales Tax on Luxury Goods (SLTGs). the companies are subsequently required to pay import
duties and settle VAT and SLTGs, which were originally
This regulation also stipulates goods originating from
not withheld. Instead, the companies may withhold VAT
other places within the customs area which are exported
and SLTGs from other parties.
by companies that obtain import facility for export
(kemudahan impor untuk tujuan ekspor/KITE). Effective
as of 13 April 2020, this regulation stipulates incentives
for three types of KITE, namely KITE Exemption, KITE Implementation of Tax Administration
Services in Force Majeure Due to
Drawback, and KITE for Small and Medium Industries
(KITE IKM).
COVID-19
Under this regulation, goods that are further processed
or assembled with products are eligible for incentives The Ministry of Finance has issued a regulation on the
in the form of non-withholding of VAT or SLTGs. These implementation of tax administration services in force
incentives are only granted to KITE exempt companies or majeure due to the Corona virus (COVID-19) pandemic.
KITE IKM companies whose production is used 100% for This regulation was released as the spread of COVID-19
export. has affected tax administration services. Arrangements
for the implementation of these services are outlined in
The taxable persons for VAT purposes (pengusaha kena the Minister of Finance Regulation No.29/PMK.03/2020
pajak/PKP) who supply the taxable goods are required to concerning the Implementation of Tax Administration
prepare tax invoices with an additional statement “VAT is Services in Force Majeure Due to the Corona Virus 2019
not withheld”. However, companies cannot use combined Disease Pandemic (MoF Reg. No. 29/2020).
tax invoices.
Enacted and entered into force on 7 April 2020, the
KITE Exemption companies or KITE IKM companies regulation stipulates the due dates of tax administration
that import goods may use goods handover certificate services in force majeure may be extended for a certain
(surat serah terima barang/SSTB) as evidence. Further, period. Such a period will be further stipulated by the
the goods in question must undergo the final process, i.e. Director General of Taxes through derivative technical
being processed, assembled, and/or installed for export. regulations that take into account the level of emergency
or disaster in each region. These considerations also refer
The companies are also required to export processed,
to the decisions of regional heads or other authorized
assembled, and/or installed products no later than
agency officials.
twelve months after the import.
The tax administration services refer to an activity
Additionally, the deadline can be extended if 3 conditions
or series of activities carried out to meet the needs of
occur. First, buyers delay exports. Second, there is an
external services as per legislative provisions on taxation
export cancellation or change of buyers. Third, there is
for the implementation of rights and fulfillment of tax
force majeure, such as wars, natural disasters, or fires.
obligations which require the issuance of legal products
Further, export realization reports are to be submitted no
by the DGT.
later than 30 days from the end of the export deadline. If
the exported goods do not undergo the abovementioned On the other hand, the extension under this regulation
final process, the KITE exemption or KITE IKM companies shall become invalid if it causes the completion of tax
are obliged to pay the formerly non-withheld VAT or administration services to exceed the periods previously
SLTGs. stipulated in laws, government regulations in lieu of laws,
or government regulations. In addition to the completion
The government also defers import duties does not due date, this applies to the provisions on the extension
withhold VAT or SLTGs for the supply of products. These and re-application of legal products of tax administration
incentives are granted to KITE exemption and KITE services. Further, the provisions under this regulation do
drawback companies if the supply of products to the not apply to the issuance of legal products upon requests
bonded zone is further processed or assembled with for tax administration services that may be made online.