The government stipulates seven certain service delivery transactions that are only subject to Value Added Tax (VAT) of 10% of the generally accepted tariff. Thus, on average, VAT is only imposed on 1.1% or lower than the rate that should be at 11% as of 1 April 2022.
The tax relief is stated in the Minister of Finance Regulation (PMK) Number 71/PMK.03/2022 on Value Added Tax on the Transfer of Certain Taxable Services, which revised a number of previous related provisions. The type of tax mentioned in this policy is final VAT.
In this regulation, the government requires VAT-Registered Persons (PKP), who conduct certain services, to collect and pay VAT payable at a certain amount.
The tax base is adjusted to the type of service provided.
The following are seven types of transfer of Taxable Services (JKP) which are only charged with 10% VAT from the normal rate:
|Type of Services||Tax Base (Description)|
|1||Package delivery||Replacement value|
|2||Tour and travel agency||Selling price of tour packages, transportation facilities and accommodation (excluding commission of sales intermediary service)|
|3||Freight forwarding||the amount of the bill|
|4||Marketing with voucher media||voucher selling price|
|5||Voucher distribution transaction service||voucher selling price|
|6||Loyalty & customer rewards program||voucher selling price|
|7||Religious trip*||*Package price (*Tax burden becomes 5% of the VAT rate if the organizer cannot detail the bill for the cost of religious trip and travel to other places)|
Specifically for freight forwarding services, the Minister of Finance emphasized that the transportation costs (freight charges) paid or should be paid by service recipients are in the form of an airplane, ship, train, and/or road transportation modes.
As for services for organizing religious trips, the government considers the details of bills for religious trips and trips to other places as the basis for determining the 10% VAT rate. In this case, if the operator is unable to detail the bills, the VAT collected will be 5% of the current rate of 11%.
Previously, the seven types of services mentioned were grouped as services subject to VAT based on the Other Value (DPP Nilai Lain), resulting in an effective VAT rate of below 10%.
With the enactment of PMK Number 71/PMK.03/2022, substantially the average effective tariff is not significantly different from the previous provisions. However, the VAT rate which is the basis for calculating the tax amount will increase from 10% to 11% as of 1 April 2022 and has the potential to rise again to 12% by 2025 at the latest.
Likewise, with the provisions on the tax credit, there is no change between the old provisions and the new ones. In essence, the Input Tax on the transfer of the services above cannot be credited.