Indonesia has recently amended its VAT law by issuing Law 11/2020 concerning job creation (Law 11/2020), which took effect starting from November 2 2020.
There are several significant changes in Law 11/2020 including on the topic of claiming input VAT as VAT credit. The summary of changes between the old and the new provisions are listed below.
No.
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New provision
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Previous provision
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1.
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Crediting input VAT for the taxpayer, that has not made any supply or export of taxable goods or services (TGS) or in a pre-production phase:
May claim for any type of input VAT subject to other general provisions of uncreditable input VAT;
No longer be able to claim the VAT refund in a monthly basis. Refund is available at the end of the fiscal bookkeeping year;
Has a three year period to make supply or export of TGS from its own production since the first input VAT claim in the VAT return. Failure to make such supply or export of TGS will result in the taxpayer having to return the refunded VAT and/or cannot carry forward/compensate the remaining VAT overpayment to the fiscal period after the abovementioned three years. A longer period than three years is available for certain industries that will be regulated under, or based on the minister of finance’s regulations.
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Crediting input VAT for the taxpayer, that has not made any supply or export of TGS or in a pre-production phase:
May claim for input VAT related only to the acquisition of capital goods. Other types of input VAT are not creditable.
May claim the VAT refund in a monthly basis or at the end of the fiscal bookkeeping year.
Has a three year period to make supply or export of TGS from its own production since the first input VAT claim in the VAT return. Failure to make such a supply or export of TGS will result in the taxpayer having to return the refunded VAT and/or cannot carry forward/compensate the remaining VAT overpayment to the fiscal period after the abovementioned three years. A two year extension period is available.
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2.
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Provisions regarding the uncreditable input VAT:
The taxpayer can claim the input VAT for the acquisition of TGS prior to being stipulated as a taxable entrepreneur. The amount is calculated under the the guidance of crediting input VAT scheme of 80% of output VAT.
The taxpayer can claim the input VAT for the acquisition of TGS on which the input VAT is collected by a tax assessment.
The taxpayer can claim the input VAT for the acquisition of TGS discovered during the tax audit provided that the tax assessment is not submitted for further dispute and has been paid subject to other creditable input VAT provisions. The claimable input VAT amount is the principle amount not including penalty.
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Provisions regarding the uncreditable input VAT:
The taxpayer cannot claim any input VAT for the acquisition of TGS prior to being stipulated as a taxable entrepreneur.
The taxpayer cannot claim any input VAT for the acquisition of TGS on which the input VAT is collected by a tax assessment
The taxpayer cannot claim any input VAT for the acquisition of TGS discovered during the tax audit.
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Endy Arya Yoga
Partner
E: endy.yoga@gnv.id
Aditya Wicaksono
Director
E: aditya.wicaksono@gnv.id