Government Regulates VAT Collection Mechanism for Transactions Between SOEs

The government affirms that the obligation to collect Value Added Tax (VAT) and Sales Tax on Luxury Goods (STLG) in the transaction between State-Owned Enterprises (SOEs) is the authority of the party delivering the goods. 

According to this, the government has also increased the number of SOE Subsidiaries that are entitled to collect VAT, from 23 companies to 28 companies. 

The confirmation is carried out to avoid ambiguity related to the policies so far that require every state company or SOE and its subsidiaries to collect VAT from every transaction made.  

The certainty of the VAT collection mechanism by companies whose shares are owned by the government is contained in Regulation of the Minister of Finance (PMK) No. 8/PMK.03/2021, in effect as of 1 February 2021. 

In its consideration, this rule was issued to provide legal certainty in collecting, depositing and reporting VAT by each state-owned company. 

Previously, the procedures for collecting, depositing and reporting VAT by state companies and their subsidiaries were regulated in PMK Number 136 / PMK.03 / 2012 and PMK Number 37 / PMK.03 / 2015. With the issuance of PMK Number 8 / PMK.03 / 2021, the two regulations aforementioned are automatically revoked. 

Scope 

In substance, PMK No. 8 / PMK.03 / 2021 regulates several things such as the criteria for SOEs and their certain subsidiaries designated to collect, deposit and report VAT for goods and services. 

By definition, SOE is a business entity whose shares are wholly or partly owned by the State through direct investment. Meanwhile, the definition of a certain SOE subsidiary includes a company whose shares are more than 25% owned by SOEs. 

Read: Getting Sanction of VAT on Export Straight for A Better Indonesia 

The amount of VAT that must be collected by SOEs and their subsidiaries is 10% of the value of tax basis. While the amount of VAT and STLG is adjusted to the applicable regulations.

For the collection, the counterparty of the state-owned company or subsidiary is obliged to make a tax invoice. 

After collecting, SOEs and subsidiaries must deposit VAT or VAT and STLG with the Tax Payment Slip within 15 days of the following month. Then, report through the Periodic VAT Returns. .  

Not all transactions for the delivery of goods and services are subject to VAT or STLG. Criteria for transactions that are exempt from VAT and STLG collection include: 

• Payment with a maximum transaction value of IDR 10 million 
• Payment for the delivery of goods or services that receive VAT facilities is not collected or exempted 
• Payment for the delivery of fuel oil and non-oil fuel by PT Pertamina (Persero) 
• Payment for the delivery of telecommunication services by telecommunication companies 
• Payment for air transport services provided by the airline 
• Other payments, which according to the regulations are not subject to VAT or VAT and STLG 

Adding a List of Subsidiaries 

Furthermore, the government has also determined 28 SOE subsidiaries appointed to collect VAT or VAT and STLG, through the Decree of the Minister of Finance (KMK) Number 30/KMK.03/2021. The number of companies assigned is more than the previous, which is only as many as 23 entities. 

Some of the newly established SOE subsidiaries are PT Waskita Karya Realty, PT PP Properti Tbk, PT Wijaya Karya Realty Tbk, PT HK Realtindo and PT Adhi Commuter Properti. 

Not only adding, the mechanism of determining certain companies owned by SOEs as VAT collectors is also changed. If previously the determination had to go through PMK then it will now be sufficient by the KMK.