• Maulana Ibrahim & Gabriel Muara Thobias

VAT-Able Entrepreneur: Definition, Benefits, and How-to Sign Up



VAT-Able Entrepreneur is an entrepreneur who makes the following delivery of Taxable Goods (“BKP”) and/or Taxable Services (“JKP”) which are subject to tax under the VAT Law (“UU PPN”).


Turnover Threshold To Be A VAT-Able Entrepreneur (PKP)


Entrepreneurs who make deliveries as follows:

  1. delivery of Taxable Goods (BKP) within the Customs Area carried out by entrepreneurs;

  2. delivery of Taxable Services (JKP) within the Customs Area carried out by entrepreneurs;

  3. Export of Tangible Taxable Goods (BKP) by PKP;

  4. export of Intangible Taxable Goods (BKP) by PKP; and

  5. Taxable Services (JKP) exports by PKP.

Are required to register to be a PKP and to collect, deposit, and report VAT and Sales Tax on Luxury Goods due.


Exceptions are given to small entrepreneurs who, for 1 (one) financial year, deliver BKP and/or JKP with a total gross turnover and/or gross receipts of not more than IDR 4,8 Billion. Total gross turnover and/or gross receipts are the total amount of delivery of BKP and/or JKP made by entrepreneurs in relation to their business.

The small entrepreneur can register to be a PKP. Small entrepreneurs who registered to be a PKP are required to carry out the provisions like a PKP.


PKP Application Requirements


Entrepreneurs that want to register to be a PKP should file an application and its required attachments electronically or in written form.


Open this link to download the PKP Inauguration Form Template


Application should be attached with the following documents:

  1. for Individual Entreprenuers:

  2. for Indonesians, a photocopy of the Identity Card

  3. for Foreigners, a photocopy of their passport, or a photocopy of their Temporary Stay Permit Card (KITAS) or their Permanent Stay Permit Card (KITAP)

  4. for Entrepreneurs with Undivided Inheritance the documents should show their role as a representative for said entrepreneurs, as listed:

  5. A photocopy of Tax Identification Number (TIN) from one of the heirs, if it is represented by one of the heirs;

  6. A photocopy of a deed of will, will, or any other equal document, and a photocopy of the TIN Card of the will executor, if it is represented by the will executor,

  7. a photocopy of the document that entails the party that is in charge of managing the inheritance and a photocopy of the TIN Card of said party, if it is represented by the managing party

  8. for Headquarter Corporations:

  9. a photocopy of the corporate’s establishment:

  10. Deed of establishment and its amendments, for Local Corporations, or

  11. a certificate of appointment from the headquarter for a permanent establishment; and

  12. a document entailing the identification of directors, including:

  13. for Indonesians, a photocopy of the Identification Card and TIN Card

  14. for Foreigners:

  15. a photocopy of their passport; and

  16. a photocopy of their TIN Card, if they are registered as a Taxpayer;

  17. for Branch Corporations:

  18. a certificate as a branch of the corporation or a certificate of appointment from the headquarter for a permanent establishment; and

  19. identity document for the head of the branch or permanent establishment, including:

  20. for Indonesians, namely photocopy of the Identification Card and photocopy of TIN Card;

  21. for Foreign Citizens, namely:

  22. photocopy of passport; and

  23. photocopy of TIN Card, if that they are registered as a Taxpayer;

  24. for Corporations in the form of a Joint Operation:

  25. a photocopy of cooperation agreement or deed of establishment as a form of Joint Operation;

  26. a photocopy of TIN Card of each member in the form of Joint Operation which is required to have a TIN; and

  27. identity documents of the management appointed as representatives of the Joint Operation form and one of the administrators of each member company of the Joint Operation form, including:

  28. for Indonesian Citizens, namely photocopies of ID cards and TIN cards;

  29. for Foreign Citizens, namely:

  30. photocopy of passport; and

  31. photocopy of TIN Card, if that they are registered as a Taxpayer;


In the event that an Entrepreneur uses a Virtual Office as a place of business activity or a domicile, the Entrepreneur must also attach a photocopy of:

  1. contracts, agreements, or similar documents that are still valid between the Virtual Office service provider and the Entrepreneur; and

  2. documents showing the issuance of license, business statements, or information on activities from authorized officials or agencies, namely Trading Business License (SIUP), Business Place License (SITU), Tourism Business Registration Certificate (TDUP), Construction Services Business License (IUJK), or other similar documents.


Managers are people who:

  1. actually has the authority to participate in determining policies and/or making decisions in running the company as referred to in the KUP Law;

  2. his name is listed in the Annual Corporate Income Tax Return for the latest Fiscal Year whose submission period has expired at the time of submitting an application for VAT-Able Entrepreneur, except for branches and Joint Operations; and/or

  3. In the event that the manager's name is not listed in the Annual Corporate Income Tax Return, the management must submit a photocopy of the letter of appointment of the management concerned or a certificate from the authorized leader of the Corporate Taxpayer explaining its position as an authorized person to determine policies and/or take decisions in carrying out company activities.


The inauguration of PKP based on the Entrepreneur’s application can be granted as long as the Entrepreneur fulfills the following conditions:

a. for Individual Entrepreneurs or Undistributed Inheritance:

  • has submitted the Annual Income Tax Return for the last 2 (two) Fiscal Years that have become its obligations and the submission period has matured in accordance with the applicable tax laws and regulations; and

  • does not have tax payable, except for tax payable that have obtained approval to install or postponed tax payments;

b. for Headquarter Corporate Entrepreneurs:

  • has submitted the Annual Income Tax Return for the last 2 (two) Fiscal Years that have become its obligations and the submission period has matured in accordance with the tax laws and regulations;

  • do not have tax payable, except for tax payable that have obtained approval to install or postponed tax payments; and

  • the entire management or person in charge of the Entrepreneur complies with the provisions as referred to in number 1 and number 2;

c. for Branch Corporate Entrepreneurs:

  • The Headquarter Corporate Entrepreneur has submitted the Annual Income Tax Return for the last 2 (two) Fiscal Years that have become his obligations and the submission period has matured in accordance with the tax laws and regulations;

  • do not have tax payable, except for tax payable that have obtained approval to install or postponed tax payments; and

  • the branch manager fulfills the provisions as referred to in number 1 and number 2;

d. for Corporate Entrepreneurs in the form of Joint Operations:

  • all members of the Joint Operation have submitted the Annual Income Tax Return for the last 2 (two) Fiscal Years that have become their obligations and the submission period has matured in accordance with the tax laws and regulations;

  • all members of Joint Operations do not have tax payable, except for tax payable that have obtained approval to pay in installments or postponed tax payments; and

  • the entire management or person in charge of the Joint Operation fulfills the provisions as referred to in number 1 and number 2;


Procedure for PKP Application


The electronic application for PKP is carried out by:

  1. filling out and submitting the PKP Application Form; and

  2. uploading a digital copy (softcopy) of the required documents,

on the Registration Application (Aplikasi Registrasi) available on the website of the Directorate General of Taxes.


The PKP Application Form that has been filled out and submitted through the Registration Application (Aplikasi Registrasi) is deemed to have been signed electronically and has legal force.


Based on application:

  1. To the Taxpayer, Electronic Proof of Receipt (“BPE”) is issued, in the event that the application fulfills the provisions; or

  2. the application is deemed not submitted and the Head of KPP notifies the entrepreneur through the registered e-mail address at the Directorate General of Taxes, in the event that the application does not meet the provisions.


Regarding the application of PKP that has been granted by BPE or BPS, the Head of KPP or KP2KP shall conduct administrative research on:

  1. fulfillment of completeness and conformity of documents; and/or

  2. fulfillment of the provisions of the inauguration of the PKP.


Based on administrative research, the Head of KPP or KP2KP gives a decision in the form of:

  1. accept the application by issuing the Taxable Entrepreneur Confirmation Letter, in the event that the application fulfills the completeness of the documents and/or requirements; or

  2. reject the application by issuing a Rejection Letter of Confirmation of a Taxable Entrepreneur, in the event that the application does not meet the completeness of the document requirements and/or provisions.

no later than 1 (one) working day after the BPE or BPS is issued.


If the Head of KPP or KP2KP does not issue a decision within that time period, the Entrepeneur application is considered granted and the Head of KPP or KP2KP must issue a Taxable Entrepreneur Confirmation Letter no later than 1 (one) working day after the date after the end of the decision-making period.


The Deem of PKP


The Head of KPP can deem an Entrepreneur as PKP, in the event that the Entrepreneur does not fulfill its obligation to register their business as PKP.


The deem of PKP is carried out based on the results of audit or administrative research according to data and/or information owned or obtained by the Directorate General of Taxes, including data and/or information obtained from extensification activities.


Based on the results of the audit or administrative research, the Head of KPP or KP2KP issues a PKP Confirmation Letter for PKPs that are confirmed in office.


PKP Revocation


The revocation of the PKP shall be carried out by the Director General of Taxes on:

  1. PKP with Non-Effective Taxpayer status;

  2. PKP whose existence and/or business activities are unknown;

  3. PKP that abuses the PKP status;

  4. PKP that changes its address to another KPP's working area;

  5. PKP that no longer meets the requirements as PKP;

  6. PKP that has been centralized where Value Added Tax is payable in another place; or

  7. PKP that no longer meets the subjective and/or objective requirements in accordance with the applicable tax laws and regulations.


The revocation of the PKP can be carried out:

  1. at the request of the PKP; or

  2. ex-officio


The revocation of the PKP towards the PKP application or ex-officio is carried out based on the results of the verification or the results of the audit in accordance with the applicable tax laws and regulations which regulates the audit or verification procedures.


The revocation of the PKP upon the application of the PKP or ex-officio is carried out based on the verification results if the revocation of the PKP is carried out on:

  1. PKP for individuals who have passed away;

  2. PKP that has been centralized where Value Added Tax is payable in another place;

  3. PKP who changes their residence address, domicile and/or place of business activity to another Tax Service Office working area;

  4. PKP whose total business turnover and/or gross revenue for 1 (one) financial year does not exceed the limit of total business turnover and/or gross revenue for small entrepreneurs and does not choose to become PKP;

  5. PKP other than a limited liability company with an inactive (non-effective) status and clearly does not show any business activities; or

  6. PKP a permanent establishment that has stopped its business activities in Indonesia.


The revocation of the ex-officio PKP can also be carried out based on the verification results in the event that the revocation is related to:

  1. results of the national tax census;

  2. the results of field confirmation or supervision after being made a PKP; or

  3. results of other activities carried out by the Director General of Taxes.


An application for revocation of the Taxable Entrepreneur on the application of PKP shall be made by using the Form for Revocation of Inauguration of a Taxable Entrepreneur.


Open this link to download the PKP Revocation Form


Applications for revocation of PKP are made electronically by filling out the Form of Revocation of Confirmation of Taxable Entrepreneurs on the e-Registration Application available on the Directorate General of Taxes website at www.pajak.go.id.


The revocation application that has been submitted by the Taxpayer through the e-Registration Application is deemed to have been signed electronically or digitally and has legal force.


The Taxable Entrepreneur who has submitted the complete Form of Revocation of Inauguration of the Taxable Entrepreneur in the e-Registration Application must send the required documents to the KPP whose working area includes the residence or place of domicile or place of business of the Taxable Entrepreneur.


The delivery of the required documents can be done by uploading a digital copy (softcopy) of the document through the e-Registration Application (Aplikasi e-Registrasi) or sending it using a signed Document Delivery Letter.


If the required documents have not been received by the KPP within 14 (fourteen) working days after the electronic submission of the application for revocation of the Taxable Entrepreneur, the application is deemed not to have been submitted.


If the required documents have been received completely, the KPP will issue a proof of receipt of the letter electronically.


In the event that the revocation of the Taxable Entrepreneur is related to an Individual Taxable Entrepreneur who passed away, the application for revocation of the Taxable Entrepreneur may be submitted by one of the heirs, executor of the will, or the party managing the inheritance.


Based on the request of revocation of PKP that BPE or BPS issued, the Head of KPP conducts an audit in accordance with the applicable tax laws and regulations which regulates the audit procedures.


Based on the results of the audit, the Head of KPP gives a decision in the form of:

  1. accept the application for revocation of PKP by issuing a Letter of Revocation of Confirmation of PKP, in the event that the Entrepreneur no longer fulfills the provisions as PKP; or

  2. reject the application for revocation of PKP by issuing a Letter of Refusal to Revocation of Confirmation of PKP, in the event that the Entrepreneur still fulfills the provisions as PKP.


The decision is issued no later than 6 (six) months from the date of the BPE as referred to in or the date of BPS.


If the Head of KPP does not issue a decision within a maximum period of 6 (six) months, the PKP application is considered granted and the Head of KPP must issue a Letter of Revocation of Confirmation of PKP at the latest 1 (one) month after the period of issuance of the decision ends.


Benefits of being a PKP

PKP can credit the Input VAT and request a refund of the VAT Overpayment. If in a tax period, the output tax is greater than the input tax, the difference is the VAT that must be paid. If in a Tax Period, the Input Tax that can be credited is greater than the Output Tax, the difference is the excess tax which is compensated for the next Tax Period. For the excess of Input Tax, a refund application can be submitted at the end of the financial year.


Please note that the Input Tax obtained before the entrepreneur is registered as a PKP cannot be credited.


For the excess of Input Tax, a refund application can be submitted in each Tax Period by:

  1. PKP exporting Tangible BKP;

  2. PKP submitting BKP and/or submitting JKP to Value Added Tax Collector;

  3. PKP submitting BKP and/or submitting JKP for which Value Added Tax is not collected;

  4. PKP exporting Intangible BKP;

  5. PKP exporting JKP; and/or

  6. PKP is not in production yet


The refund of Input VAT Overpayment as referred to in letter a to letter e, which has the criteria as a low-risk PKP, is carried out with a preliminary refund of VAT Overpayment.


For PKP who has not made a delivery of BKP or JKP that is subject to VAT for a maximum of 3 years, the Input Tax that has been credited and has been given a refund must be paid back by the PKP.


If during a Tax Period, PKP in addition to making a delivery that is subject to VAT, also makes a delivery that is not subject to VAT, as long as the part of the delivery that is subject to VAT can be known from its books, the amount of Input Tax that can be credited is the Input Tax relating to the delivery that is subject to VAT.

If during a Tax Period, PKP apart from making a delivery that is subject to VAT, it also makes a delivery that is not subject to VAT, while the Input Tax for the delivery that is subject to VAT cannot be known with certainty, the amount of Input Tax that can be credited for the delivery that is subject to VAT is calculated using the guidelines set out by the Minister of Finance.

PKP Obligation


PKP who make deliveries are as follows:

  1. delivery of BKP within the Customs Area carried out by entrepreneurs;

  2. delivery of JKP within the Customs Area carried out by entrepreneurs;

  3. Export of Tangible BKP by PKP;

  4. export of Intangible BKP by PKP; and

  5. JKP exports by PKP.

the tax is payable at the place of residence or domicile and/or the place where business activities are carried out or at a place other than the place of residence or domicile and/or the place where business activities are carried out as regulated by the Regulation of the Director General of Taxes.

Upon written notification from the PKP, the Director General of Taxes may determine 1 (one) or more places where the tax is payable. Individual PKP is taxed at the place of residence and/or place of business activity, while for corporate PKP, is taxed at the place of domicile and place of business activity.

If the PKP has one or more places of business activity outside the place of residence or domicile, each of these places is the place where the tax is due and the PKP is required to register its business as PKP.


PKP is required to make a VAT Invoice for each:

  1. delivery of BKP as referred to in Article 4 paragraph (1) letter a or letter f and/or Article 16D of the VAT Law;

  2. delivery of JKP as referred to in Article 4 paragraph (1) letter c of the VAT Law;

  3. export of Intangible BKP as referred to in Article 4 paragraph (1) letter g of the VAT Law; and/or

  4. JKP exports as referred to in Article 4 paragraph (1) letter h of the VAT Law.

VAT Invoices do not need to be made specifically or different from sales invoices. VAT Invoices can be in the form of sales invoices or certain documents designated as VAT Invoices by the Director General of Taxes.


Exempted from this provision, PKP may make 1 (one) VAT Invoice covering all deliveries made to BKP buyers or recipients of the same JKP for 1 (one) calendar month. The VAT Invoice must be made no later than the end of the month of delivery.


Payment of VAT by PKP must be made no later than the end of the following month after the end of the Tax Period and before the submission of VAT Return.


Case Examples


First Case


Mr. A is registered at the KPP Jakarta Kebayoran Baru Dua and owns an auto parts shop at the Fatmawati Auto Parts Center, with turnover from January to April 2020 reaching IDR 2 billion. Meanwhile, the turnover in May 2020 was IDR 3 billion. Is Mr. A required to register as a PKP?


The Small Entrepreneurs limit has been exceeded in May 2020, so Mr. A must immediately register his business to be a PKP to the Jakarta Kebayoran Baru Dua KPP no later than the end of the following month, which is 30 June 2020.


Kasus Kedua


PT. B is a company that sells jewelry in Palembang. During August 2016, PT. B carried out various transactions as follows:


Sales of gold bars directly to consumers amounting to IDR4,600,000,000.

Sales of diamond necklaces amounting to IDR660,000,000.


Is PT. B required to register as a PKP?


Even though the limit for PKP has been exceeded, due to the delivery of BKP only amounting to IDR660,000,000 while the rest is considered as a Non-BKP delivery. Then, PT. B is not required to register as a PKP.

 

Legal Basis:

  1. Law Number 8 Year 1983 regarding Value Added Tax and Sales Tax on Luxury Goods which has been amended several times, lastly by Law Number 7 Year 2021.

  2. Minister of Finance Regulation Number 68/PMK.03/2010 regarding Limits for Small Entrepreneurs Value Added Tax which has been amended by the Minister of Finance Regulation Number 197/PMK.03/2013.

  3. Director General of Taxes Regulation Number PER-04/PJ/2020 regarding Technical Instructions for Administration of Taxpayer Identification Numbers, Electronic Certificates, and Inauguration of Taxable Entrepreneurs.

 

Contact Us


Marketing Communications at MIB


📧 marketing.communications@mib.group

📞 +6281911880099


MIB is a group of certified and registered professionals in Indonesia, where each member has a unique set of skills and expertise. Each member is independent, compliant with our standards, and responsible for the works and services provided to the clients.

 



94 views