Transportation handling and goods transport (freight forwarding) services are highly interrelated with export and import activities. The service providers focus on assisting consumers to deliver goods—commonly in large volume—from one place to another place by using various means of goods transportation (land, sea, and air).?
Freight forwarding?companies can provide one or more services or transportation activities, from loading/unloading of goods, customs document handlings, goods delivery, to other activities related to goods transport process.
Therefore,?freight forwarding?is commonly defined as a series of goods transport activities that are interrelated with one another.
Other Value as VAT Base
One of tax aspects attached to freight forwarding business activities is Value Added Tax (VAT). In this case, freight forwarding?is included to the category of services that are allowed to use Other Value as VAT Base (“Other Value”) at the rate of 10% of the real value or commonly known as the 1% VAT.?
The legal basis of this policy is Minister of Finance (MoF) Regulation Number 38/PMK.011/2013—as last amended by MoF Regulation Number 56/PMK/.03/2015, which is confirmed by Director General of Taxes (DGT) Circular Number 33/PJ/2013.?
The DGT’s confirmation has raised questions, especially among providers of goods transport services using trucks. This is because, the means of land transportation explicitly stated in SE 33/PJ/2013 is only train. Trucks and the likes are not stated.?
So, are goods transport services by trucks (trucking) not categorized as freight forwarding services? This confirmation is essential to the permission for the service providers to use the Other Value or the 1% VAT.
According to SE 33/PJ/2013, the Other Value may be used by the freight forwarding service entrepreneurs for the transfer of goods transport services, which cover transportation fees (freight charges).?
Freight charges?are transportation fees that are paid or should be paid by service users. In this case, the fees can be in the form of fees of transportation via airplanes, ships, and/or trains—including fuel surcharge.
Even though not explicitly stated in SE 33/PJ/2013, trucking services should still be categorized as means of transportation allowed to use the Other Value or the 1% VAT. This is according to the definition of freight forwarding services as stated in Article 2 of Minister of Transportation (MoT) Regulation Number 49 Year 2017 on the Conduct and Operation of Transportation Handling Services.?
The MoT Regulation mentions that business activities in transportation handling services are business activities in goods delivery and reception via land, train, sea, and air transportation. This also covers document settlement handling, reception, storage, delivery, management, and distribution of goods.
In the freight forwarding industry, subcontract is commonly conducted in consumer goods delivery,?including the use of trucking services. Hence, the use of trucking services is an integral part of business in transportation handling and goods transport services.?
Seeing the facts, the author concludes that in the transfer of freight forwarding services, some fees for the use of trucking services are allowed to use Other Value as VAT Base or the 1% VAT.?
