Page 5 - Newsletter(Additional Covid-19 Related Tax Incentives and Technical Guidelines for the Appointment of E-Commerce VAT Withholders)

DDTC Newsletter Vol.04 | No.05 I September 2020 Page 5 of 13

Additional Covid-19-Related Tax Incentives and Technical
Guidelines for the Appointment of E-Commerce VAT Withholders

names that are prepared in writing and render rights Minister takes into account the minimum purchase
and obligations between the Indonesian government requirement, reasonableness, and appropriateness
and international bodies. of the quantity and type of goods. Next, based on the
recommendations from the State Secretary Minister,
The renewal of the provisions on VAT and/or SLTGs
the Minister of Finance may issue a VAT and/or SLTGs
exemptions is outlined in Government Regulation No.
Exemption Certificate (Surat Keterangan Bebas/SKB).
47 of 2020 concerning the Granting of Value Added
Tax or Value Added Tax and Sales Tax on Luxury Goods As Gov. Reg. 47/2020 comes into effect, international
Exemptions to Representatives of Foreign Countries bodies that have received exemptions or VAT and/
and International Bodies and Their Officials (Gov. Reg. or SLTGs refunds will still be granted with these
47/2020). exemptions until the enactment of the minister of
finance decree concerning their VAT and/or SLTGs
This regulation shall be valid in 60 days as of 18 August
exemptions.
2020. The enactment of this regulation simultaneously
revokes the former regulation, i.e. Government Moreover, through Gov. Reg. 47/2020, the government
Regulation No. 47 of 2013 concerning the Granting emphasizes the provisions on the minimum purchase
of Value Added Tax or Value Added Tax and Sales Tax requirement of transactions exempted from VAT and/
on Luxury Goods Exemptions to Representatives of or SLTGs for representatives of foreign countries and
Foreign Countries and International Bodies and Their their officials.
Officials (Gov. Reg. 47/2013).
This regulation outlines that representatives of foreign
Under the former regulation, VAT and SLTGs countries and their officials may be granted with VAT
exemptions were only granted to international bodies and/or SLTGs exemptions based on the principle
on the basis of reciprocity. Nevertheless, to align with of reciprocity. The VAT and/or SLTGs exemptions
Article 16B of the VAT Law, the granting of VAT and/ are granted for transactions equal to or above the
or SLTGs exemptions to international bodies and their minimum purchase requirement stipulated by the
officials is now based on international agreements or foreign country or the minimum purchase requirement
international practice. set by the Minister for Foreign Affairs.

In further detail, agreement-based VAT and/or SLTGs The minimum purchase requirement stipulated by
exemptions are granted to international bodies as well a foreign country applies if the minimum purchase
as officials of international bodies whose agreements requirement set by the Minister for Foreign Affairs is
contain provisions on the granting of VAT and/or lower than that stipulated by the foreign country.
SLTGs exemptions.
The minimum purchase requirement set by the
However, if there is no agreement between the Minister for Foreign Affairs, however, applies if it is
Indonesian government and international bodies or higher than that stipulated by the foreign country.
such an agreement contains no provisions on VAT
and/or SLTGs exemptions, the granting of exemptions In essence, the minimum purchase requirement of
may be based on international practice. transactions that are granted with VAT and/or SLTGs
exemptions depends on the provisions of the foreign
An example of international practice is an international country and the Minister for Foreign Affairs. The
body that carries out projects in several countries, applicable minimum purchase requirement, however,
including Indonesia. In the event that within one of is the higher of the stipulations set by the foreign
these countries, the international body is entitled country or the Minister for Foreign Affairs.
to the VAT and/or SLTGs exemption facilities, the
international body may be provided with such facilities This regulation also elucidates that in the event that
on the basis of international practice. Indonesia does not have a representative office in a
certain country, VAT and/or SLTGs exemptions may be
The granting of VAT and/or SLTGs exemptions based granted for representatives of foreign countries and
on the international agreement or practice is stipulated their officials that are currently in Indonesia based on
by the Minister of Finance. The granting of VAT and/or the principle of reciprocity.
SLTGs exemptions may be stipulated after obtaining
considerations and recommendations from the State Under the former regulation, the exempted minimum
Secretary Minister. purchase requirement was not explained in detail.
However, the memory of the elucidation of Article
In providing recommendations concerning VAT 3 paragraph (2) of Gov. Reg. 47/2013 outlined that
and/or SLTGs exemptions, the State Secretary