Indonesia Tax: More revisions to VAT law now in effect

The latest amendments to Indonesia's VAT law (No. 42 of 2009 signed by the President on 15 October 2009) became effective on 1 April 2010. The most important changes include the following:

- Certain exports of services and intangible goods are subject to a 0% VAT rate;
- Financial services, including Shari'ah-compliant businesses, are not subject to VAT;
- The transfer of VATable goods by an entrepreneur registered for VAT purposes regarding financial services based on Shari'ah falls within the scope of a transfer of goods subject to VAT;
- The transfer of goods in a merger, liquidation, spin-off or acquisition is not deemed to be a transfer subject to VAT if both parties are registered as VAT taxpayers;
- VAT invoicing requirements must be met and VAT invoices must be issued at the time of payment of taxable goods and/or services or the delivery of goods/services, whichever is earlier.
- The VAT return must be submitted monthly and if VAT has been underpaid, the full payment must be made before the VAT return filing deadline (i.e. no later than the end of the following month); and
- VAT refund claims are permitted only at the end of a tax year, although certain entrepreneurs may request a refund on a monthly basis.


The Ministry of Finance has issued regulations on various aspects of the new VAT rules, some of which clarify the rules relating to tax invoices:

- An export declaration form for the export of intangible taxable goods/services can be treated as a tax invoice if it has attached to it an invoice that constitutes an inseparable part of the export declaration for the goods/services. Other documents that will be accepted as a tax invoice include an import declaration, a tax payment slip used for self-assessed VAT on offshore service payments, electricity bills, telecommunications service bills, tickets, airway bills and delivery bills from domestic air transport service providers.
- The tax invoice format is more flexible, and there is no longer a difference between a standard tax invoice and a simple tax invoice.
- A company's designated or authorized official is not required to state his/her title when signing the tax invoice.
- Tax invoice issuers are no longer subject to a 2% penalty if they do not provide information on the buyer (i.e. name, address and taxpayer ID number). However, the buyer or recipient of the tax invoice still will not be able to credit the VAT paid as input VAT.

Taxpayers can expect more implementing regulations and guidance to be issued to further clarify and address the changes to the VAT law.