VAT and STLG Facilities for Foreign Country Representatives, International Organizations, and Their Representatives are Reorganized

The government has reorganized the provisions regarding the granting of Value Added Tax (VAT) and Sales Tax on Luxury Goods (STLG) facilities for foreign country representatives and international organizations, along with their representatives serving in Indonesia.

This is stipulated in the Minister of Finance Regulation (PMK) Number 59 of 2024, which outlines the procedures for granting VAT and STLG exemptions to foreign country representatives and international organizations. The regulation consolidates several related rules.

First, PMK Number 248/PMK.010/2015 and PMK Number 162/PMK.03/2014, amended by PMK Number 33/PMK.03/2018, regarding the procedures for issuing VAT and STLG exemption certificates to foreign country representatives, international organizations, and their representatives.

Second, provisions regarding the procedures for reclaiming VAT and STLG should not have been exempted by foreign country representatives, international organizations, and their representatives.

Third, provisions on the procedures for the refund of VAT and STLG that have already been collected from foreign country representatives, international organizations, and their representatives, as regulated in PMK Number 161/PMK.03/2014.

In addition to consolidating the provisions from these regulations, PMK Number 59 of 2024 also revises certain substantive aspects contained within the regulations.

Definition of Foreign Country Representatives and International Organizations

A foreign country representative refers to diplomatic and/or consular representatives accredited to the government of the Republic of Indonesia. This includes permanent representatives or diplomatic missions accredited to the Secretariat of the Association of Southeast Asian Nations (ASEAN), international organizations treated as diplomatic/consular representatives, as well as special missions, and based in Indonesia.

Meanwhile, the international organizations referred to in this regulation are representative bodies of international organizations under the United Nations (UN), bodies under foreign country representatives, and other foreign organizations/institutions that are located and domiciled in Indonesia.

The officials of foreign country representatives and international organization representatives covered by this regulation include heads, officials/staff, or experts who are non-Indonesian citizens (non-WNI) and have received approval from the Indonesian government.

VAT and STLG Facilities for Foreign Country Representatives, International Organizations, and Their Representatives

The tax facilities provided include, first, exemption from VAT and STLG on the import of taxable goods by foreign country representatives, international organizations, and their representatives.

Second, exemption from VAT and STLG on the transfer of taxable goods and/or taxable services by VAT-registered persons to foreign country representatives, international organizations, and their representatives.

The exemption of VAT and STLG to foreign country representatives and their officials is carried out based on the principle of reciprocity. Meanwhile, facilities for international organizations are granted based on international agreements or customs. 

The agreement in question regulates the provision of tax exemptions or facilities and has been ratified or enacted into law in accordance with the provisions of international agreements.

Meanwhile, the principle of international prevalence is used when there is no agreement governing the provision of facilities or even though there is an agreement, but it does not contain the provision of facilities.

Furthermore, officials of foreign country representatives and international organizations eligible for the facilities must meet several conditions, such as being foreign nationals, residing in Indonesia, and receiving approval from the Minister of Foreign Affairs for foreign country representatives or from the Minister of State Secretary for international organization representatives.

Taxable Goods (BKP) Eligible for VAT and STLG Exemptions

Taxable goods eligible for VAT and STLG exemptions include motor vehicles and non-motor vehicles.

1. Motor Vehicles

Motor vehicles eligible for these facilities are primarily four-wheeled vehicles. However, if a diplomatic mission, international organizations, or their representatives require non-four-wheeled vehicles, the exemption can be granted based on government consideration.

Specifically, the types of four-wheeled vehicles eligible for the exemption include imported fully assembled vehicles (completely built up/CBU), vehicles produced or assembled in Indonesia, or vehicles purchased domestically in completely built-up (CBU).

2. Non-Motor Vehicles

VAT and STLG exemptions are also granted for the import and transfer of goods other than motor vehicles, except for land and/or buildings acquired by foreign country representatives and international organization representatives.

The types of taxable services eligible for exemptions are those received or utilized by foreign country representatives, international organizations, and their representatives.

It is important to note that both taxable goods (BKP) and taxable services (JKP) that qualify for exemptions must not be used to generate income or profit in Indonesia.

Requirements for Obtaining VAT and STLG Exemption Facilities

To obtain the VAT and STLG exemption facility, each foreign country representative, international organization, or their representative must obtain a certificate of exemption (SKB) or have a Tax Identity Number if the provision of facilities is made through the VAT and STLG return.

To obtain SKB, foreign country representatives, international organizations, or their representatives may submit an application to the Head of the Tax Office (KPP) with a recommendation letter from the Minister of Foreign Affairs or the Minister of State Secretary and supporting evidence.

The supporting evidence required includes:

1. Proforma Invoice and copy of purchase order or other documents that can be equated
2. Evidence required by the Ministry of Foreign Affairs or the Ministry of State Secretary.
3. For the acquisition of motor vehicles, it is equipped with a statement letter detailing the ownership of motor vehicles and motor vehicle sale-purchase agreement documents.

Furthermore, the application, recommendation letter, and other supporting evidence are submitted to the Directorate General of Taxes electronically, using the account of the foreign country representatives, international organizations, or their representatives concerned. If it is difficult to send electronically, you can use postal media or send it directly. (ASP/KEN)