🎧 Listen to This Article
The Indonesian Directorate General of Taxes (DGT) has introduced pivotal guidance through regulation PER-1/PJ/2025, aimed at assisting taxable entities (“pengusaha kena pajak” or PKPs) in the smooth transition to a new Value Added Tax (VAT) rate of 12%. This regulation provides much-needed legal clarity and detailed technical instructions for the issuance of tax invoices, in line with Minister of Finance Regulation No. 131/2024 (PMK-131).
Understanding VAT Invoices During the Transition Phase
Under the new regulatory framework, it is crucial for PKPs to correctly and comprehensively issue VAT invoices. According to PMK-131, the 12% VAT rate is applied to a tax base defined as “the other value” (DPP nilai lain), which is parameterized at 11/12 of the import value, selling price, or compensation. Consequently, the effective VAT rate reflects an average of 11%.
To accommodate this abrupt policy shift—effective January 1, 2025—the DGT has instituted a grace period for VAT invoices issued between January 1 and March 31, 2025. During this timeframe, PKPs may validly issue either:
- VAT invoices applying the 12% rate on a full/normal tax base, or
- VAT invoices applying an 11% rate on a full/normal tax base.
Additionally, documents equivalent to VAT invoices that do not state the DPP nilai lain amount are also accepted. In cases where VAT is collected at the 12% rate, buyers are entitled to request refunds for any excess VAT charged. Sellers will then need to issue corrected or replacement VAT invoices in response to such requests.
VAT Invoices for Retail Sales of Luxury Goods
Under PMK-131, luxury taxable goods subjected to luxury goods sales tax will also carry the new 12% VAT rate, beginning with domestic deliveries to consumers in January 2025. The applicable VAT rules are delineated as follows:
- Transitional Period (January 1-31, 2025): VAT will be calculated at a rate of 12%, applied to 11/12 of the selling price as the tax base.
- Post-Transitional (Effective from February 1, 2025): VAT will be directly calculated at 12% of the actual selling price.
Nevertheless, PER-1 specifies that this transitional VAT rule does not apply to deliveries by retailers involving certain items, including:
- Motor vehicles
- Watercraft (including cruise ships and ferries)
- Air transport (airplanes, helicopters, etc.)
- Real estate
- Firearms and ammunition
This structured approach is designed to facilitate adherence to the new VAT rate while ensuring PKPs are compliant with Indonesian tax laws.
Streamlined VAT Invoice Issuance for Specific PKPs
In a move to simplify the tax invoicing process, especially for those PKPs inundated with transaction volumes, the DGT has introduced Decree No. KEP-24/PJ/2025. This decree outlines guidelines for “specific PKPs,” defined as those generating at least 10,000 tax invoices monthly.
Key points include:
- Definition of Specific PKPs: Identified as entities issuing a substantial number of invoices.
- List of Registered PKPs: A formal attachment provides comprehensive details on qualifying entities.
- Authorized E-Invoicing Methods: Eligible PKPs may use either a desktop e-Faktur client or a host-to-host application for tax invoice issuance. Additionally, they can still utilize the taxpayer portal module within the Core Tax Administration System as an alternative submission method.
This regulation, effective from January 15, 2025, aims to foster efficiency and compliance among high-volume PKPs.
Updated Regulation on Customs and Excise Audits
The Indonesian Ministry of Finance (MoF) has also introduced Regulation No. 114 of 2024 (PMK-114) focused on optimizing customs and excise audits. This new regulation replaces older provisions, like MoF Regulation No. 200 of 2011, which were deemed insufficient for current compliance needs and did not effectively cover the business processes for customs and excise audits.
Among the updates provided in PMK-114 are:
- Comprehensive Business Process Regulations: It establishes a detailed framework governing customs and excise audit business processes.
- Clear Audit Planning Procedures: New guidelines under Article 6 delineate explicit procedures for audit planning, enhancing oversight effectiveness.
Overall, these recent changes underscore the Indonesian government’s commitment to modernizing its tax framework, ensuring that PKPs are adequately prepared for transitions, and harmonizing compliance protocols.
Key Changes in PMK-114/2024: Enhancing Customs and Excise Audits
The recent implementation of PMK-114/2024 brings significant transformations to the customs and excise audit framework. This new regulation not only clarifies existing procedures but also aims to boost the efficiency and effectiveness of audit practices. Below, we outline the critical changes introduced by PMK-114/2024 along with their anticipated impacts.
Summary of Changes
| Aspect | Previous Framework | New Regulation |
|---|---|---|
| Audit Sampling | Not explicitly detailed | Establishes a legal framework for effective audit sampling techniques in physical inspections and data verification (Articles 16 and 23) |
| Use of Audit Sampling Techniques | Limited scope for audit sampling in data verification | Expands the use of audit sampling in data verification and physical stocktaking, enhancing audit efficiency |
| Audit Period | General audit period set for two years | Reduced to 21 months to promote timely audits (Article 5) |
| Preventing Expired Import Declarations | No specific preventive measures | Adjusted audit timelines to prevent expiration of PIBs before field audits commence |
| Audit Reporting | Standard report was Laporan Hasil Audit (LHA) | Audit report format changed to Laporan Pemeriksaan Audit (Article 22) |
| Audit Termination Reports | No specific format for terminated audits | Requires a special report for discontinued audits |
| Audit Team Authority | Limited authority for auditors | Grants additional authority, enabling auditors to request external information, engage expert witnesses, and take enforcement actions, including sealing suspected goods and transport |
| Penalties and Enforcement | Lacked explicit regulation | Introduces clear provisions on blocking, security measures, and enforcement in Chapter 6 (Articles 19-21) |
Impact of PMK-114/2024
PMK-114/2024 substantially enhances the clarity, efficiency, and effectiveness of customs and excise audits. Key improvements include a structured audit planning process, expanded audit sampling techniques, shorter audit periods, and enhanced reporting mechanisms. These modifications are designed to reinforce compliance and oversight in the customs and excise sectors. Businesses should be aware of these changes and ensure they are in compliance with the new requirements to mitigate potential issues during audits.
Implementation Timeline
The regulation is set to take effect 60 days after its promulgation on December 31, 2024. It is important to note that any customs and excise audits already in process before this date will continue under the former provisions outlined in PMK-200, as amended by PMK-258.
Conclusion
As PMK-114/2024 reshapes the operational landscape for customs and excise audits, stakeholders in the industry must adapt promptly. Understanding these changes will be crucial for maintaining compliance and optimizing audit readiness in the evolving regulatory environment.
For further details, clarification, contributions or any concerns regarding this article, please feel free to reach out to us at editorial@tax.news. We value your feedback and are committed to providing accurate and timely information. Please note that all inquiries will be handled in accordance with our privacy policy
