BPK Flags Misdirected Tax Incentives
JAKARTA, DDTCNews – The Supreme Audit Board (Badan Pemeriksa Keuangan/BPK in Indonesian) has highlighted the granting of government-borne (ditanggung pemerintah/DTP in Indonesian) value added tax (VAT) incentives that are indicated to have not yet reached the intended recipients. This topic is one of the reviews featured in national media today, Friday (23/10/2206).
The BPK considers that the Directorate General of Taxes (DGT) information system has not been equipped with adequate control in the implementation of the government-borne VAT incentive. This observation was conveyed by the BPK in its Audit Report on the Ministry of Finance (MoF) Financial Statements for 2025.
"Based on the results of the assessment of the issuance of tax invoice code 07, it is known that there are taxpayers receiving the government-borne VAT facility for landed houses and battery electric vehicle (BEV) transfers that are indicated to not fulfil the requirements, amounting to IDR25.65 billion," stated the BPK.
In detail, the BPK found that the total granting of the government-borne VAT facility worth IDR1.14 billion on the transfer of houses with a price above IDR2 billion had contradicted the applicable provisions. This is because government-borne VAT is only granted on the fractions of the selling price of a house up to IDR2 billion.
The BPK also found transfers of electric vehicles for which a tax invoice with code 01 had not been issued for the fraction of VAT not borne by the government. Based on the BPK's findings, IDR24.51 billion in VAT should have been borne by the buyers based on a tax invoice with code 01.
Further, the BPK also found tax invoices bearing code 07 on house transfers where the VAT was not calculated using the alternative tax base (dasar pengenaan pajak/DPP in Indonesian) of 11/12 of the selling price. This resulted in a VAT calculation discrepancy of IDR9.55 billion.
Finally, the BPK found the issuance of tax invoices not supported by complete and valid evidence. In detail, 3,866 tax invoices did not include the buyer's national identification number (nomor induk kependudukan/NIK in Indonesian), 914 tax invoices without a facility stamp and 1,093 tax invoices with an incorrect facility stamp.
The BPK considers that all of the above issues arose because the DGT does not yet have a system capable of preventing errors in tax invoice preparation. The DGT is also considered to have not yet optimally verified the government-borne VAT facility.
Given these conditions, the BPK has requested that the DGT design a system that can prevent errors in the preparation of government-borne VAT tax invoices and promote tiered supevision of taxpayer compliance with obligations in transactions utilising the government-borne VAT facility.
In addition to the above topic, there is also a review concerning the continuation of the tax holiday facility. Further, there are discussions relating to the reduction of tax penalties, the government-borne VAT facility for airline tickets, Indonesian Financial Accounting Standards (PSAK) 117, the integration of the coretax system and the AHU portal and other matters.
The following is a complete review of the tax articles.
Government-Borne VAT on Airline Tickets: 3 Obligations for Airlines
In terms of the government-borne VAT facility, the government has recently also reintroduced an incentive in the form of government-borne VAT for the purchase of economy class tickets on domestic routes during the Christmas and New Year period 2026/2027.
In its implementation, airlines supplying scheduled commercial air transport services have a number of obligations as stipulated under the Minister of Finance of Regulation (MoF Reg.) 77/2026. These obligations include issuing tax invoices and filing monthly periodic VAT returns.
"An air transport business entity, as a taxable person, supplying scheduled economy class domestic commercial air transport services, is required to prepare tax invoices or certain documents equivalent to the ax invoice and file periodic VAT returns," reads Article 4 paragraph (1) of MoF Reg. 77/2026. (DDTCNews)
Airlangga Confirms Tax Holiday Remains in Place
The government has no plans to discontinue the tax holiday incentive although Indonesia has chosen to adopt the global minimum tax in accordance with the GloBE rules.
Coordinating Minister for Economic Affairs, Airlangga Hartarto, stated that many countries continue to provide tax incentives, such as the tax holiday, although the global minimum tax is already in force.
"Canada provides special tax privileges at a rate below the global minimum tax. As such, we continue to formulate policy according to our needs. Several countries in ASEAN also provide facilities, including in the area of taxation," he said. (DDTCNews)
Taxpayers Urged to Beware of Tax Penalty Reduction Scams
The DGT has reminded taxpayers to be vigilant against fraudulent schemes operating under the guise of programmes offering a reduction or nullification of administrative tax penalties of up to 100%.
The DGT explained that fraudsters may exploit the administrative penalty reduction programme to deceive taxpayers via WhatsApp messages. Taxpayers are advised to exercise caution when receiving messages about penalty reduction programmes, particularly if accompanied by an Android package kit (APK)-format application file.
"Please note that the DGT never sends APK-format application files via WhatsApp, nor does it request tax payment transfers to personal bank accounts," the DGT clarified on social media. (DDTCNews)
Coretax and AHU Online Portal Integrated
The DGT and the Directorate General of General Legal Administration (Administrasi Hukum Umum/AHU in Indonesian) have integrated the coretax system with the AHU Online Portal serviceto strengthen data exchange in support of tax administration and legal entity administration.
The DGT explained that the integration of the coretax system and the AHU Online Portal aims to simplify the registration of legal entities or business entities, as well as the automatic issuance of corporate taxpayer identification numbers (TIN). Consequently, it is no longer necessary to submit a separate application for the issuance of a TIN.
"The administrative process has become far simpler, faster, free of data duplication and provides legal and tax certainty from the very outset of a business," wrote the DGT via its official social media account. (DDTCNews)
OJK Coordinates with DGT on Implementation of PSAK 117
The Financial Services Authority (Otoritas Jasa Keuangan/OJK in Indonesian) has made it mandatory for all insurance companies and reinsurance companies to implement financial statements according to the Indonesian Financial Accounting Standards (Pernyataan Standar Akuntansi Keuangan/PSAK in Indonesian) 117, which became effective or fully audited in 2026.
OJK Executive Head of Insurance, Guarantee and Pension Fund Supervision, Ogi Prastomiyono, stated that the OJK is coordinating with the DGT and insurance industry associations to support the harmonisation of tax provisions with the implementation of PSAK 117 on Insurance Contracts.
"At the same time, providing certainty for insurance companies in fulfilling their obligations pursuant to the applicable provisions," he said. (Kontan)
Moeldoko Proposes 10% VAT Discount Incentive for Electric Vehicles
Chairperson of the Indonesian Electric Vehicle Industry Association (Perkumpulan Industri Kendaraan Listrik Indonesia/Periklindo in Indonesian), Moeldoko, has requested that the government include commercial electric vehicles in the electrification vehicle incentive scheme.
He argued that commercial vehicles may contribute significantly to reducing fuel consumption and carbon dioxide emissions. This is given that such vehicles are widely used for operational activities requiring large amounts of energy.
“We have submitted a letter to the government requesting that commercial vehicles also be included in the incentive scheme. The form could be equivalent to that for passenger vehicles, namely a VAT reduction of 10%,” he said. (Bisnis.com)