VAT Exempt Strategic Goods Needing Withholding Exemption Certificates

JAKARTA, DDTCNews - Supplies of certain strategic taxable goods are exempt from value added tax (VAT) as regulated in Government Regulation (Gov. Reg.) Number 49/2022.

10 types of certain strategic taxable goods (BKP) may be exempt from VAT. Of the 10 types of Taxable Goods, 4 types of Taxable Goods require Withholding Exemption Certificates (Surat Keterangan Bebas, hereinafter referred to as SKB), thereby, the said Taxable Goods are not subject to VAT.

“VA exemptions for Imports and/or Supplies of certain strategic Taxable Goods referred to in Article 6 paragraph (2) subparagraph a, subparagraph n, subparagraph o and subparagraph p use a withholding exemption certificate,” reads Article 9 paragraph (1) Gov. Reg. 49/2022, quoted on Sunday (19/2/2023).

First, machinery and factory equipment constituting a single unit, both installed and detached, which are used directly in the process of producing Taxable Goods by Taxable Persons for VAT Purposes producing these Taxable Goods.

Machinery and factory equipment exempt from VAT also include those acquired by parties carrying out integrated construction, excluding spare parts thereof.

Second, weapons, ammunition, bulletproof helmets and jackets or bulletproof vests, special land vehicles, radars and spare parts thereof, supplied to:

• The Ministry or government agencies that administer government affairs in the defence or state security sector; or
• non-ministerial government agencies that are under and responsible to the president through the coordination of the head of the indonesian national police and have duties and functions in the field of prevention and eradication of the abuse and illicit traffic of narcotics, psychotropics and precursors and other addictive substances, except for addictive substances for tobacco and alcohol.

Third, components or materials acquired by state-owned enterprises engaged in the national defence industry appointed by the ministry or government agencies for the manufacture of weapons, ammunition, special land vehicles, radar and spare parts thereof, which will be supplied to:

• The ministry or government agencies that administer government affairs in the defence or state security sector; or
• Non-ministerial government agencies that are under and responsible to the President through the coordination of the Head of the Indonesian National Police and have duties and functions in the field of prevention and eradication of the abuse and illicit traffic of narcotics, psychotropics and precursors and other addictive substances, except for addictive substances for tobacco and alcohol.

Fourth, equipment and spare parts thereof used for the provision of border data, topographic maps, hydrographic maps and aerial photographs of the territory of the Unitary State of the Republic of Indonesia carried out to support national defences, supplied to the ministry of defence or the Indonesian National Defence Forces. (rig)