Summary of Tax Regulation (September)

Summary of Tax Regulation

PER-29/PJ/2008, Format, Content, and Procedure for Periodic Value Added Tax Return (Periodic VAT Return) in form of Hard Copy for VAT-registered Person appointed at Tax Office in relation to Data and Document Processing at the Tax Data and Document Processing Centre

Periodic VAT Return (Form No. 1108) in hard copy consists of: a) Main Form No. 1108 (F.1.2.32.03); b) Appendix No. 1 of List of Output Tax and Sales Tax on Luxury Goods – Form No. 1108 A (D.1.2.32.05); and c) Appendix 2 of List of Input Tax and Sales Tax on Luxury Goods – Form No. 1108 B (D.1.2.32.06). The main form and the appendixes can be obtained at the Tax Offices/ can be downloaded from the official site of the Directorate General of Taxes at http://www.pajak.go.id, which formats as in accordance with the attachment I of this Regulation including the content and the size should not be changed. The attachment II of this Regulation contains the procedure of filling and information to be completed in the return. VAT-registered Persons who file the return in hard copy should use this Form. Other than those obliged to file in hard copy, the return in form of electronic data should be filed using Form No.1107. Further, for Vat-registered Persons previously file the returns in hard copy and later file them in electronic data, it is no longer allowed to file the returns in hard copy, except for the revision of tax returns which are previously filed in hard copy. VAT-registered Persons shall be considered not submitting their returns and subject to tax sanction if the returns filed do not meet the stipulated conditions. VAT returns can be submitted manually by the related VAT-registered Persons to the Tax Office via a) Direct delivery to the Tax Office; or b) Registered mail through a Post Office/by expedition service provider company/by courier service provider company. Upon every VAT return submitted, the Tax Office shall conduct examination on it. In case of VAT return in nil balance, the related VAT-registered Person shall only file the Main Form and the VAT return is considered already filed. In the event that a VAT-registered Person makes a revision to the following VAT return, a) Periodic VAT Return Form No. 1195, the revision is made using Form No. 1195; b) Periodic VAT Return Form No. 1107, the revision is made using Form No. 1107 either in electronic data or hardcopy; c) Periodic VAT Return Form No. 1108, the revision is made using either Form No. 1108 or Form No. 1107 in electronic data. Revision to VAT Return is conducted under the prevailing tax regulation. This Regulation is effective starting from the tax period of June 2008 and it revokes the Regulation of the Director General of Taxes No. PER-14/PJ./2008.

KEP-127/PJ./2008, Starting Place and Time of Validity of Value Added Tax Return of Form No. 1108 at Tax Offices in the South Jakarta Regional Office of Directorate General of Taxes

This Decree determines the tax offices in the South Jakarta Regional Office of Directorate General of Taxes as the starting place in which Value Added Tax Return of Form No. 1108 firstly becomes valid. This validation starts in the tax period of August 2008 whereas this Decree is effective since its promulgation date on 11 August 2008.

SE-37/PJ./2008, Value Added Treatment on Extensive Courier Service for International Package Delivery outside Customs Area

Entrepreneurs of Package Delivery Service in a Customs Area may request to a third party outside Customs Area to extend delivery from a place/ country outside Customs Area to another place/country until reaching the delivery recipient’s address. Upon the extensive package delivery conducted outside Customs Area, Value Added Tax shall not be imposed. Such service rendered by a third party based on the request of Courier Service entrepreneurs in Customs Area is not considered as utilization of Taxable Service outside Customs Area, thus it is not subject to Value Added Tax.

SE-47/PJ./2008, Revocation of Circular Letter of the Director General of Taxes and Revocation of Confirmation Letter concerning the Utilization of Q.Q method in Standard Tax Invoice

This Circular Letter restructures ruling and interpretation to the prevailing tax regulation that may potentially give raise to distortion in the implementation of good law principles. In accordance with the matter, this circular revokes the following Circular Letters:

a. SE-25/PJ.32/1989 concerning VAT in connection with Export using other Export Quota Name;

b. SE-19/PJ.32/1990concerning VAT in connection with Export Handling;

c. SE-09/PJ.531/2000 concerning the use of Q.Q method in Standard Tax Invoice.

Further, this Circular confirms that all preceding confirmation letters, which gave approval to VAT-Registered person to issue standard tax invoice using Q.Q. method, shall no longer prevail and is revoked since this Circular is effectively prevailed.

SE-4/PJ.03/2008, Affirmation of Income Tax Article 26 paragraph (4) Imposition in relation to Income Received or Acquired by Permanent Establishment Conducting Government Project Funded by Foreign Aid or Loan

Article 3 of Government Regulation No.42 Year 1995 as lastly amended with Government Regulation No.25 Year 2001 stipulates that, “Income Tax due on income received or acquired by contractors, consultants and main suppliers from works conducted in relation to Government projects implementation funded by foreign aid and or loan, is borne by the Government.” This Circular affirms that in the event that the party receiving such income is a permanent establishment (PE), the definition of “Income Tax” shall include tax on Taxable Income after deducted with tax from a PE in Indonesia under the Article 26 paragraph (4) of Income Tax Law. Thus, in the event that Income Tax due on income received/acquired by a PE meets the provisions as stipulated in Government Regulation No.42 Year 1995 resulting Income Tax due borne by the Government, Income Tax Article 26 paragraph (4) due is also borne by the Government. This Circular is also to revoke the affirmations contradictory to this Circular.

“Article 2

Upon income received from construction service shall be subject to final income tax

“Article 3

Income Tax tariff for construction service shall be as follows:

a. 2% (two percent) for construction implementation rendered by service provider having small business qualification;

b. 4% (four percent) for construction implementation rendered by service provider having no business qualification

c. 3% (three percent) for construction implementation rendered by service provider other than those mentioned in letter a and letter b

d. 4% (four percent) for construction planning or construction supervision rendered by service provider having business qualification; and

e. 6% (six percent) for construction planning or construction supervision rendered by service provider having no business qualification.

Government Regulation Number 51 year 2008 dated 20 July 2008

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