SURAT DIRJEN PAJAK
S-937/PJ.322/2006
Ditetapkan tanggal 3 Oktober 2006

A MATTER AFFECTING ALL NEW INVESTORS IN THE MANUFACTURING SECTOR

Responding to your letter, dated XXX, we would like to inform you as follows :

1. Through your letter, you mentioned that you have a very potential question which a few significant investors gave raised with you, as follows :

   1. Previously, when the Master List Facility was under the BKPM, consolidated approvals for exemption from custom duty and VAT were given for the totality of all imports, which enter Indonesia in multiple shipments. This was efficient from an investor's perspective as it provided an efficient administrative process for Master List Approval.

   2. Subsequently the authority and procedure for approving relief from customs duty, VAT and PPh 22 on Master List asst was split into three. This was the source of some administrative inefficiency for the investor.

   3. A Further source of inefficiency which we are seeking your assistance with is the following :

      • Customs Duty and PPh 22 relief are approved in total or aggregate amount of that Master List Equipment, in advance of, and irrespective or the number of shipments, required.

      • The VAT department of the tax office (of at least the PMA tax office) insists that it is obliged to approve VAT relief for each shipment and that the tax office cannot approve the VAT relief for this total shipment in one exercise in advance. The following regulation / policy is cited for this position : DGT Decision Letter No. KEP-234/PJ/2003.

      • Your questions were :

        1. Why can't VAT and customs approval both be done in the same way, that is in advance, for the total shipment? Previously, one approval used to be given in total in advance under BKPM for both customs and VAT on Master List Assets? so this would not really be a new policy of procedure, just a reinstatement of a previous successful procedure.

        2. Why if Customs can conduct the aggregate approval prior to first shipment/import of Master List Assets, cannot VAT relief be treated in exactly the same manner by the Tax office at exactly the same time? Any way the import customs clearance will also cover compliance on all import levy & taxes : customs, PPh 22, VAT, Luxury Sales Tax, Etc. This is all administered by the Customs office.

2. Tax regulations related to this issue are :
   The Law Number 18 of 2000 Concerning The Second Amendment To Las Number 8 Year 1983 Concerning Value Added Tax On Goods And Services And Sales Tax On Luxury Goods.

   • Article 1
     Point 9. Import shall be any activity to import goods from outside the Customs Area into the Customs Area.

   • Article 4 point b
     A Value Added Tax is imposed on :

     1. the Import of Taxable Goods;

   • Article 5

• Article 11

1. Related to your letter mentioned in number 1, and considering Tax regulation mentioned in number 2, we inform that It is not a matter of procedure or efficiency, but it is a matter or tax principles, as follows :
   As mentioned in the Article 11 (1), The Law Number 18 of 2000 About the Second Amendment to Law Number 8 Year 1983 Concerning Value Added Tax On Goods And Services And Sales Tax On Luxury Goods : "The tax is owed at the time of the import of the Taxable Goods". Therefore the VAT & Sales Tax on Luxury Goods relief must be obtained for each importation of the Taxable Goods.
   
   In conclusion, regardless current procedure for Customs Duty, the approval procedure of the VAT relief for each shipment has been performed in accordance with Tax regulations. Therefore, with all respect, we can not consider your idea to grant a single VAT relief for total shipments.

Thank your very much for your kind attention.