Indonesia Issues Guidance on VAT Treatment for Temporary Imports

Indonesia’s tax agency issued technical guidance for the value-added tax treatment of temporary imports of goods used to provide “taxable services from overseas,” KPMG said in an Oct. 1 post. Under the guidelines, the taxpayer had to have submitted income tax returns from the last two fiscal years and VAT returns for the last three fiscal periods, the post said. The applicant must then submit a VAT exemption application to Indonesia’s tax agency for acceptance or rejection, which must be provided within three business days, KPMG said. If the application is rejected, the applicant must pay all VATs and luxury goods taxes on the goods within one month after receiving the rejection. Penalties for late tax payments “can result in a penalty assessment equal to 2% per month,” from the time of import until the date of payment, KPMG said.