Regulation Update
Now It's VAT Law Dragged by Omnibus Law on Job Creation

Wednesday, 07 October 2020

Now It's VAT Law Dragged by Omnibus Law on Job Creation

JAKARTA. The Job Creation Law overhauled and tore some tax provisions apart, including revising several clauses in the Law on Value Added Tax on Goods and Services and Sales Tax on Luxury Goods (PPN and PPnBM). 

Tax Credit 

Based on the draft of the Job Creation Law, there are four articles of the VAT and Sales Tax on Luxury Goods (SLTG) Law that are amended. First, Article 9 which regulates the input tax credit on the acquisition of goods or services against the output tax arising from the delivery of goods or services. 

Previously, Article 9 paragraph (2a) of the VAT & SLTG Law affirmed that only VAT-Registered Persons (PKP) who have not yet produced can credit their input tax. However, based on the provisions of Article 112 of the Job Creation Law, the target is changed to VAT-Registered Persons who have not yet submitted goods or services for export, being able to credit input taxes as long as they meet the crediting requirements according to this Law. 

A tax credit can be applied if within three years the company delivers goods. Conversely, if there is no delivery of goods/services then the input tax cannot be credited. This period could be even longer for certain business sectors. 

Retail Tax Invoice  

The Job Creation Law also changes the provisions regarding tax invoice which was previously regulated in Article 13 of the VAT and SLTG Law. Especially concerning the identity of the buyer of goods or services that must be included in the tax invoice. 

Formerly, tax invoices were only required to include the name, address, and Taxpayer Identification Number (NPWP).  Meanwhile, in the latest regulation, the NPWP can be replaced with a National Identity Number (NIK) or passport number for an individual Non-Resident Individual Tax Subject or simply a name and address for the Non-Resident Corporate Tax Subject. 

The Job Creation Law also accommodates a mechanism for creating tax invoices for retailers or retail traders, which was not previously regulated. Retailers can make a tax invoice without listing the buyer's identity, seller's name, and signature when the sale is made to the end-user customer. 

Coal Becomes The VAT Object 

Another change in the Omnibus Law is a list of types of goods that are not subject to VAT. In general, four types of goods are excluded from VAT subject: (1) mining goods taken directly from the source, (2) staple goods, (3) food and beverages served in hotels, restaurants, restaurants, stalls, and the like,  as well as (4) money, gold bars, and securities. 

Related to this, the Job Creation Law specifically excludes coal mining products from the list of types of mining goods that are exempted from VAT. Thus, coal extracted directly from the source from now on will be subject to VAT. (ASP/AGS) 

 

Disclaimer:? 

These provisions refer to the draft of the Job Creation Law the official text of which is still in the finalization process at the House of Representatives (DPR) Legislation Body. All new policies mentioned may still change considering that the Constitutional Court has opened the possibility of review for the Job Creation Law. 

 

 

 

 

Draft Sementara Undang-Undang Cipta Kerja

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