Late Tax Invoices, What Risks Do They Pose?

Question:

Allow me to introduce myself, My name is Haydar. I serve as the financial staff at a company engaged in the automotive sector. Our company supplied taxable goods (barang kena pajak/BKP in Indonesian) on 10 April 2022. However, to date, we have not yet prepared the tax invoice.

My question is, is it still possible to issue the tax invoice? Further, I would be extremely grateful if you could elaborate on the implications and risks. Thank you.

Answer:

Thank you for your inquiry, Mr. Haydar. In essence, taxable persons (pengusaha kena pajak/PKP in Indonesian) are required to prepare a tax invoice for every supply of taxable goods (barang kena pajak/BKP in Indonesian) and/or taxable services (jasa kena pajak/JKP in Indonesian). These provisions are stipulated stipulate under Article 13 paragraph (1) of the Value Added Tax Law (VAT Law).

Further, the Director General of Taxes Regulation No. PER-03/PJ/2022 concerning Tax Invoices (PER-03/2022) stipulates the time tax invoices are prepared. Article 3 paragraph (2) of PER-03/2022 reads:

"(2) Tax Invoices referred to in paragraph (1) must be prepared upon:

1. a supply of Taxable Goods and/or Taxable Services;
2. the receipt of payment if payment is received before the supply of Taxable Goods and/or before the supply of Taxable Services;
3. the receipt of term payment in the event of a supply of part of work phases;
4. an export of tangible Taxable Goods, export of intangible Taxable Goods and/or export of Taxable Services; or
5. other times regulated by statutory provisions in the field of VAT.”

Further, in the event that the date listed in a tax invoice elapses the time the tax invoice should be prepared,  the tax invoice is prepared late. This is outlined in Article 32 paragraph (1) of PER-03/2022 as follows.

"(1) Tax Invoices are prepared late if the date listed in tax invoices elapses the time the Tax Invoices should be prepared referred to in Article 3 paragraph (2) or Article 4 paragraph (3)."

For the tax invoice, the taxable person is subject to the penalty under Article 14 paragraph (4) of the GPTP Law in the form of a fine of 1% of the tax base (dasar pengenaan pajak/DPP in Indonesian). VAT listed in the late tax invoice constitutes creditable input VAT insofar as it fulfils the provisions on input VAT crediting.

Moreover, please note that the taxable person must issue a tax invoice no later than three months from the time the tax invoice should be prepared. If the tax invoice is prepared after a period of 3 months, the tax invoice is deemed not to have been prepared.

These provisions are stipulated under Article 33 paragraph (1) of PER-03/2022 which reads:

"(1) Tax Invoices are prepared late if the date listed in tax invoices elapses the time the Tax Invoices should be prepared referred to in Article 3 paragraph (2) or Article 4 paragraph (3)”

This implies that the taxable person is subject to the penalty under Article 14 paragraph (4) of the GPTP Law in the form of a fine of 1% from the DPP. In addition, VAT listed in the tax invoice that is considered not prepared constitutes non-creditable input VAT.

Based on the above explanation, it can be concluded that your company remains permitted to issue the tax invoice. However, the tax invoice will be categorised as a late tax invoice.

As a result, your company will be subject to a fine of 1% of the tax base and the VAT listed in the tax invoice will constitute creditable input VAT.

That concludes our response. We hope this sufficiently addresses your inquiry.

On another note, the Tax Consultation article is published weekly to answer selected questions from loyal DDTCNews readers. Please feel free to send any inquiries to [email protected].  (sap)