Government Frees VAT For Goods For The Needs Of National Defense And Security

Illustration. Officers checked long-barreled weapons at the Defense and Security Equipment Industry exhibition at the Ministry of Defense Office, Jakarta, Tuesday, December 3, 2019. (ANTARA PHOTO-M Risyal Hidayat)

JAKARTA - The government through the Minister of Finance Regulation (PMK) Number 157 of 2023 exempts the value added tax (VAT) of taxable goods and services used for national defense and security (hankam) purposes.

PMK 157/2023 concerning Procedures for Release from Imposition of Value Added Taxes on Imports and/or Submission of Certain Taxable Goods that are Strategic and Submission in Customs Areas and/or Utilization from Outside Customs Areas within Certain Taxable Services Customs Areas that are Strategic for the Needs of Defense and/or State Security to take effect from January 1, 2024.

"With the issuance of PMK, DGT seeks to eliminate disputes in the field related to the criteria for exemption of strategic taxable goods and services for defense and security purposes," said Director of Counseling, Services, and Public Relations Dwi Astuti in Jakarta, Thursday, January 11, quoted by Antara.

PMK-157/2023 stipulates certain taxable goods (BKP) and taxable services (JKP) criteria that are strategic in the form of weapons, ammunition,maltronized helmets and jackets/barreled jackets, special land vehicles, and radar.

In addition, services in the context of providing boundary data, topographic results maps, hydrography results maps, and air photos for the territory of the Republic of Indonesia for defense and security purposes.

VAT exemption facilities are provided with the Free Certificate (SKB) mechanism. Taxpayers can obtain SKB by fulfilling the requirements for compliance and completeness of documents and information.

The PMK also regulates the authority of the DGT to oversee the use of VAT exemption facilities which in the previous provisions were not regulated, namely in the form of procedures for replacing and canceling the SKB and imposing sanctions.

The service for the provision of PPN BKP and strategic JKP exemption facilities for national defense and security is also more accessible because it already uses electronic channels. With the improvement of services from what was previously done manually, it is hoped that it can build VAT exemption governance in accordance with the principles of trust and verification," he said.

The issuance of PMK-157/2023 officially revokes the provisions of the Decree of the Minister of Finance (KMK) Number 370 of 2003 concerning the Implementation of Value Added Taxes Freed for Imports and/or Submission of Certain Taxable Goods and/or Submission of Certain Taxable Services Freed from Imposition of Value Added Taxes.

Even so, the SKB which has been issued based on KMK-370/KMK.03/2003 can still be valid until it is utilized.