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Indonesia: VAT and duty relief for certain imports of goods

Indonesia: VAT and duty relief for certain goods

Guidance issued by the Ministry of Finance clarifies the rules regarding “tax facilities”—that is, relief provided as import duty exemptions or reductions and value added tax (VAT) exemptions for imports of certain goods—under certain contracts.

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The guidance (Regulation/PMK No. 116/PMK.04/2019) was effective in October 2019 and applies with respect to imports of goods under “contracts of work” or “coal contracts of work.” The tax relief measures apply for contracts that indicate:

  • The import duty exemption or reduction
  • The import VAT exemption for goods
  • The time period for application of the tax relief

The head of a capital investment board (BKPM) or an official appointed by the Minister of Finance will issue a decree in the form of a Ministry of Finance decision (KMK) that is known as a “master list” for the imported goods that are eligible to claim the tax relief.

Any transfers, re-exports, or destruction of goods that have been imported under the tax relief measures can only be made after the lapse of a two-year period and also requires approval of the customs office (and other ministries and departments if such actions are to be made before the end of a five-year period). Failure to satisfy these requirements can result in imposition of import duty and import VAT as well as additional penalty amounts.

Read a November 2019 report [PDF 740 KB] prepared by the KPMG member firm in Indonesia

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