Regulation Update
Sale and Purchase of Used Vehicles Subject to VAT Special Rate of 1.1%

MUC Tax Research Institute | Tuesday, 12 April 2022

Sale and Purchase of Used Vehicles Subject to VAT Special Rate of 1.1%
Mulai 1 April 2022, setiap penjualan kendaraan bermotor bekas akan dikenai PPN sebesar 1,1% dari harga jual. (Photo: Torsten Dettlaff/Pexels)

The government adjusted the tariff of Value Added Tax (VAT) on motor vehicle sales based on the general rate increase as of 1 April 2022 to 10% from 11% or equivalent to 1.1% of the selling price.

The tax on the sale and purchase of used vehicles has the potential to increase to 1.2% of the selling price if the general VAT rate is again increased to 12% by 2025 at the latest.

This provision is contained in the Minister of Finance Regulation (PMK) Number 65/PMK.03/2022, which revokes the previous provision (PMK Number 79/PMK.03/2010).

Read: Rate Rises, Minister of Finance Releases List of 11 Transactions of Value Added Tax Object

The basic difference between the new policy and the old one lies in the tax base. If previously referring to revenue, starting this month the multiplier factor is the selling price of used vehicles.

In this case, only VAT-Registered Persons can deduct VAT on the sale of used vehicles, with the consequence of being obliged to submit a Periodic VAT Return. 

Read: These 7 Types of Services are Eligible For VAT Rate Reductions

Cannot Be Credited 

Other provisions that have changed are related to non-creditable input taxes. Formerly, the input tax on the purchase of a used vehicle could be credited at 90% of the output tax.

Input tax is the payable VAT that is collected when a VAT-Registered Persons taxable entrepreneur sells a used vehicle. Meanwhile, the input tax is the payable VAT which is collected when the vehicle is purchased by the VAT-Registered Persons. t
 

Peraturan Menteri Keuangan (PMK) Nomor 65/PMK.03/2022

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