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Indonesia: VAT exemption, “temporary imports” used in providing taxable services from overseas

Indonesia: VAT exemption, “temporary imports”

The tax authority of Indonesia issued technical guidance regarding the value added tax (VAT) treatment of “temporary imports” of goods that are used in providing taxable services from overseas.


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The guidance (Surat Keterangan Pemanfaatan JKP dari luar Daerah Pabean di dalam Daerah Pabean) sets forth guidelines to follow for VAT exemption applications when temporarily imported goods are used in providing taxable services from overseas. Under the guidelines, the taxpayer (either a corporation or individual) must have already submitted:

  • Annual income tax returns for the last two fiscal years; and/or
  • VAT returns for the last three fiscal periods (as a “VAT-able entrepreneur”)

A completed VAT exemption application and the required attachments are then to be filed with the tax office for the location where the taxpayer is registered. That tax office is responsible for reviewing the documents and then for issuing a decision letter of acceptance (or rejection) within three business days. If the application is rejected, the taxpayer/applicant must pay all VAT and/or VAT and luxury goods tax with regard to the import of the taxable goods. The taxpayer must settle the VAT payment within one month after the issuance of the rejection letter. The amount of the VAT paid by a taxpayer can be treated as creditable input VAT. Failure to settle the VAT (or luxury goods tax) in a timely manner can result in a penalty assessment equal to 2% per month (calculated from the time of import until the date of payment).

Read an October 2019 report [PDF 1.08 MB] prepared by the KPMG member firm in Indonesia

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