As part of the implementation of Article 32A and Article 44 E (2) (f) of Law No. 7 of 2021 on Harmonization of Tax Regulations (“Law 7/2021”), the Ministry of Finance (“MOF”) issued Regulation No. 58/PMK.03/2022 on the Appointment of Other Parties as a Tax Collector, and Collection, Submission and/or Tax Reporting Procedures to be collected by Other Parties for Transaction of Goods and/or Service through the Government Procurement Information System (“PMK 58/2022”) on 30 March 2022.
Under the PMK 58/2022, the Government Goods and/Services Procurement that is conducted through Marketplace based on electronic system platform is subject to certain applicable taxes.
The summary of the PMK 58/2022 on the transaction of the Goods and/Services Procurement as follows:
| Other Party | Partner | |
| Definition | Other Party is defined as online procurement marketplaces or online procurement retailers which are directly involved or facilitate transactions between parties in a procurement system information. | Partner is defined as Businesspersons who provide goods and/or service through the procurement information system. |
| Basic Rule | Any delivery of the goods and/or services by the Partner, including to the Government Institution and other party outside the Government Institution within the Procurement Information System is subject to taxation rule in Indonesia. | |
| Type of Applicable Tax | Article 22 Income Tax, Value Added Tax (VAT) or VAT and Luxury Goods Sales Tax. | |
| Entity to Collect the Tax | Other Party is appointed as tax collectors, to conduct collection, payment, and/or reporting of tax for transfer of goods and/or service which are done by Partners.Under Article 7 (5) of PMK 58/2022, Other Parties is obliged to collect, pay, and report the VAT and Luxury Goods Sales Tax. The Other Party must calculate:Taxable Income during the tax period for all payments relating to transactions of goods, services, and/or lease and other incomes with relations to utilization of the Partner’s asset conducted through the Other Parties in the procurement information system; and VAT and Sales Tax of Luxury Goods for transfer of Taxable Goods and/or Taxable Service by a Taxable Entrepreneur Partner, which are conducted through the Other Parties in the procurement information system Payments of taxes are to be conducted on behalf of the Other Party, using a Tax Payment Slip or other administrative means. Every Tax Payment must be conducted at the latest on the 15th day of the next month after the Tax Period ends, in accordance with laws and regulations on Taxation. | |
| Taxable Goods and/or Services | Article 22 Income Tax: any income received or obtained by Partner in relation to: sales of goods;delivery of services; and/orlease and other income relating to utilization of assets, conducted through Other Party in the Procurement Information System.The Income Tax is collected on the payment to the Partner through the government credit card or other methods as pursuant to the Available Money. Exception:Payment in relations with delivery of service of public transportation by a partner which are private person taxpayers, trough Other Parties; and/or Payment in relations with transfer of goods, service, and/or lease and other incomes in relations with utilization of assets which payments are conducted through direct payment mechanism. Tariff: The tariff of Income Tax collected is amounting to 0,5% of the total value of payment stated in an invoice, excluding VAT and Sales of Luxury Goods Tax. Furthermore, the Income Tax collected are tax credit for the Partner and may be calculated as an income tax payment in the current year for the Partners. VAT or VAT and Luxury Goods Sales Tax: this applies on each delivery of Taxable Goods and/or Services by the Partner through the Other Party through the Procurement Information System. The basis of the tax calculation is all amount mentioned in the invoice. The Input VAT on the Taxable Goods and/or Services, import of taxable Goods and the utilization of the intangible Taxable Goods and/or the Services from outside Custom within the Custom, relating to the delivery of the Goods and/or Services by Partner can be credited as pursuant to applicable tax regulations. Pursuant to Article 9 of PMK 58/2022, of the VAT or Luxury Goods Sales Tax is not applicable for: Transfer of goods and/or services which are not subject to VAT, in accordance with laws and regulations on Taxation; Transfer of Public Transport Service by private persons which are done through the Other Party;Transfer of Taxable Goods and/or Taxable Service which are not subject to VAT collection or exempted from VAT in accordance with laws and regulations on Taxation; and/or Transfer of Taxable Goods and/or Taxable Service which are conducted by a Partner in which payment are done through direct payment mechanism. | |
| Obligation Rising on the Applicability of Tax | PMK 58/2022 stipulates that Other Party who are appointed to collect tax, to (i) register to an office of the Directorate General of Taxes office which area covers the residence or domicile of the Other Party to receive a Taxpayer Identification Number (NPWP) and (ii) report its business to the Directorate General of Taxes office which area covers the residence or domicile of the Other Party to be established as a VAT Registered entrepreneur / Enterprise(s) (Pengusaha Kena Pajak / PKP). | Partner is also under obligation to to (i) register to an office of the Directorate General of Taxes office which area covers the residence or domicile of the Partner to receive a Taxpayer Identification Number (NPWP) and (ii) report its business to the Directorate General of Taxes office which area covers the residence or domicile of the Partner to be established as a VAT Registered entrepreneur / Enterprise(s) (Pengusaha Kena Pajak / PKP). Exceptiona businessperson who only conducts transfer of goods and/or service which are not subject to VAT, in accordance with prevailing laws and regulations, or Private persons which only provides public transportation services through Other Parties. Other Obligation:Partner needs to submit a copy to the Other Party of the NPWP and PKP Statement;Partner must report and conduct payment by itself if there is an underpayment of Income Tax ;Partner must also report transfers of taxable goods and/or services which value has been deducted and collected for VAT by the Other Parties in the Periodic Tax Return. |
Authors Note:
With the implementation of PMK 58/2022, a basic rule is established for marketplace to collect tax for transactions done through their system for procurement transactions specifically for the Government Procurement.
For further information, please contact:
MetaLAW, Legal Consultant, Jakarta, Indonesia
general@metalaw.id
