Nearing Year End, 4 New Derivative Gov. Regs. of the HPP Law Issued

JAKARTA, DDTCNews – Nearing the end of the year, the government has finally issued 4 government regulations (Gov. Reg.) as the derivative regulations of the Harmonisation of Tax Regulations Law.

First, Gov. Reg. 44/2022 concerning the Application of Value Added Tax (VAT) on Goods and Services and Sales Tax on Luxury Goods (STLGs). This Gov. Reg. comes into force on the date of promulgation, 2 December 2022.

One of the new substances in the Gov. Reg. is the appointment of other parties to collect, remit and/or file VAT or VAT and STLGs. There are also further arrangements of taxable goods (BKP)/taxable services (JKP).

In addition, also a new substance, there are arrangements related to the use of certain amounts. Next, there are certain provisions on documents equivalent to tax invoices. 

Second, Gov. Reg. 49/2022 concerning VAT Exempt and VAT or VAT and STLGs Non-Collected on Imports and/or Supplies of Certain Taxable Goods and/or Supplies of Certain Taxable Services and/or Utilisation of Certain Taxable Services from Outside the Customs Area.

Containing the regulation of VAT facilities, this Gov. Reg. comes into force on the date of promulgation, on 12 December 2022. Exemption from VAT or VAT non-collected stipulated in this regulation is temporary or permanent.

The facilities are evaluated by the minister of finance taking into account the conditions of the economy and the impact on state revenues.

Third, Gov. Reg. 50/2022 concerning Procedures for the Exercise of Tax Rights and Fulfilment of Tax Obligations. The Gov. Reg. in respect of general provisions and tax procedures comes into force from the date of promulgation, on 12 December 2022.

The Gov. Reg. outlines a number of regulations, including those related to the use of the new format of Taxpayer Identification Numbers (NPWP), the reduction of objection and appeal penalties and the addition of the regulation of civil review penalties pursuant to the Harmonisation of Tax Regulations Law.

There are also arrangements on the Mutual Agreement Decision Letter as the basis for tax collection, arrangements related to the criteria for taxpayers’ attorney, recovery of losses in state revenues and carbon taxes.

Fourth, Gov. Reg. 55/2022 concerning Adjustments to the Regulation in the Field of Income Taxes. This Gov. Reg. comes into force on the date of promulgation, 20 December 2022. One of the arrangements in this Gov. Reg. is related to the depreciation of tangible assets in the form of permanent buildings and/or amortisation of intangible assets with a useful life of more than 20 years.

Next, there is also the regulation of the tax treatment of income in the form of in-kind and/or fringe benefits. In addition, there are arrangements related to the imposition of final Income Tax for MSMEs formerly regulated under Gov. Reg. 23/2018.

There are also provisions on tax avoidance prevention instruments. The director general of taxes may apply the substance over form principle to recalculate tax payable.

Other technical regulations, such as minister of finance regulations (MoF Reg.), will be derived from some of the regulatory materials in the four Government Regulations. Taxpayers are required to understand a number of new arrangements in taxes after the implementation of the Harmonisation of Tax Regulations Law. (kaw)