As of 1 May 2023, Sri Mulyani Sets Collateral Subject to VAT at 1.1%

JAKARTA. Minister of Finance Sri Mulyani released a new regulation, which stipulates that collateral taken over by creditors and handed over to buyers is taxable goods (BKP).

So that the transfer will be subject to Value Added Tax (VAT) with a certain amount of 10% of the current rate of 11% multiplied by the selling price.

Thus, the rate of VAT payable on the transfer of the collateral is 1.1% of the selling price. The imposition of VAT on collateral with this calculation is effective from 1 May 2023.

This is stated in the Minister of Finance Regulation (PMK) Number 41 of 2023 which is a derivative of Government Regulation (PP) Number 44 of 2023 and the implementation of Law Number 7 of 2021 concerning Harmonization of Tax Regulations (UU HPP).

Read: 10 Important Points in New VAT Regulations

In this regard, the Director of Extension, Services, and Public Relations of the Directorate General of Taxes (DGT) Dwi Astuti stated that the new regulation also contains procedures for collecting, paying, and reporting VAT or collateral.

Those who are entitled to make VAT deductions on the collateral are creditors or financial institutions. However, even though they have deducted VAT, the creditor or financial institution cannot credit the Input Tax.

Meanwhile, the VAT payable occurs when payment is received by the financial institution. "So this will not disrupt the cash flow of the financial institution," Dwi said, as quoted from the DGT's written statement.

Meanwhile, upon deduction of collateral VAT, financial institutions or creditors are required to make tax invoices. (ASP/KEN)