The government once again offers a wide range of tax incentives, this time intended for procurement of certain goods and services related to the handling of Corona-Virus Disease 2019 (Covid-19) pandemic. The tax facilities are provided during the period of April to September 2020, with the types of incentives include:
1. Value Added Tax (VAT) that is not collected and borne by the government (Ditanggung Pemerintah/DTP);
2. Exemption of Income Tax Article (ITA) 22;
3. Exemption of ITA 22 on import;
4. Exemption of ITA 21; and
5. Exemption of ITA 23.
These taxation facilities are only intended for the procurement of certain goods and/or the utilization of certain services by certain parties selected, namely the government, hospitals, and other parties who are requested to assist in handling Covid-19.
The implementation of this tax incentive policy refers to Regulation of the Minister of Finance (PMK) Number 28/PMK.03/2020 concerning the Provision of Tax Facilities on Goods and Services Needed in Order to Handle Covid-19 Pandemic, effective since 6 April 2020.
Certain Taxable Goods and Taxable Services subject to the regulation are as follows:
|Certain Taxable Goods||Certain Taxable Services|
3. Laboratory Equipment
4. Detection Equipment
5. Personal Protective Equipment
6. Equipment for Patient Care
7. Other Supporting Equipment Declared for the Handling of Covid-19 Pandemic
1. Construction Services
2. Consulting, Engineering, and Management Services
3. Rental Services
4. Other Supporting Services Declared for Handling Covid-19 Pandemic Needs
VAT not collected and VAT borne by the government
The Minister of Finance emphasized that VAT is not collected on certain Taxable Goods imports (see table) by government agencies or institutions, hospitals, and other parties intended to assist in handling Covid-19.
Meanwhile, the facility of VAT borne by the government is intended for the provision of certain Taxable Goods and Taxable Services by VAT-Registered Persons (Pengusaha Kena Pajak/PKP) to specified parties, including the granting of the facility of free of charge for Taxable Goods. For such transaction, the PKP must fulfill the following obligations:
a. make a tax invoice affixed with PPN DITANGGUNG PEMERINTAH EKS PMK NOMOR.../PMK.03/2020;
b. make a Tax Payment Slip (Surat Setoran Pajak) or a billing code affixed with PPN DITANGGUNG PEMERINTAH EKS PMK NOMOR ../PMK.03/2020;
c. make a report on the realization of the VAT borne by the government according to the specified format, for April-June 2020 tax period and the July-September 2020 tax period; and
d. submit those three documents to the Tax Office (Kantor Pelayanan Pajak/KPP) no later than 20 July 2020 for the April-June 2020 tax period, and 20 October for the July-September 2020 tax period.
The facility of VAT borne by the government is also intended for the utilization of specified Taxable Services from outside the customs area within the customs area by certain parties. In addition, the government also does not impose VAT on specified Taxable Goods imports in the context of utilizing specified Taxable Services from outside the customs area within the customs area, as long as the certain party can show the ownership of SKJLN before importing. SKJLN is a certificate of utilization of taxable services from outside the customs area within the customs area.
For the utilization of Taxable Services from outside the customs area, the certain parties are also obliged to do the following:
a. make a Tax Payment Slip or a billing code affixed with PPN DITANGGUNG PEMERINTAH EKS PMK NOMOR ... /PMK.03/2020;
b. make a report on the realization of the VAT borne by the government in accordance with the predetermined format, for April-June 2020 tax period and July-September 2020 tax period; and
c. submit both documents to the Tax Office (Kantor Pelayanan Pajak/KPP) no later than 20 July 2020 for the April-June 2020 tax period, and 20 October for the July-September 2020 tax period.
Exemption of ITA 22
Besides VAT incentive, certain parties who conduct the procurement of Taxable Goods and Taxable Services for the handling of Covid-19 are also exempted from ITA 22 and/or ITA 22 on import over the next six months. In this case, the Directorate General of Customs and Excise (DGCE) as the executor in the field can exempt the ITA 22 on import without any Exemption Certificate (Surat Keterangan Bebas/SKB).
The exemption of ITA 22 is also granted to third parties who conduct sales of goods needed in handling Covid-19. The difference is, the third parties who sell goods related to Covid-19 disaster management must hold an Exemption Certificate to obtain this facility. For this reason, taxpayers must submit the application of Exemption Certificate to the Tax Office in writing through certain channels.
As a consequence, certain taxpayers who obtain these facilities must make a report on the realization of the exemption of ITA 22 and ITA 22 on import no later than 20 July for April-June 2020 tax period and 20 October for July-September 2020 tax period.
The Exemption of ITA 21 and ITA 23
The next facility regulated in PMK Number 28/PMK.03/2020 is the exemption of ITA 21 for individual taxpayers who receive compensation for services received from certain parties related to the handling of pandemic. The exemption of ITA 21 is granted without any Exemption Certificate for the April 2020 up to September 2020 tax period.
Whereas, resident corporate taxpayers and Permanent Establishments (Bentuk Usaha Tetap/BUT) who receive compensation for providing certain services from certain parties related to handling the pandemic are entitled to the exemption of ITA 23. The condition is that the taxpayers must have an Exemption Certificate from the Tax Office and the application of which can be submitted in writing through certain channels.