Tax Invoice Issued Late, Is Future Issuance Possible?

Question:

My name is Tina, a tax staff member at a Bandung-based manufacturing company. On behalf of the company, I would like to raise questions concerning tax invoices. Our company unintentionally failed to issue a tax invoice for one sales transaction for the July 2022 period. Is it possible to issue an invoice at this stage or alternatively, should we submit an amendment?

Further, if we proceed with an amendment, can the tax invoice be credited by the counterparty and what is the applicable procedure? Lastly, what are the penalties or fines that may be imposed on our company or the counterparty?

That concludes our inquiry. We thank you in advance for your time and response.

Answer:

Thank you for your question, Mrs. Tina. Pursuant to the provisions, taxable persons (pengusaha kena pajak/PKP in Indonesian) are obliged to issue a tax invoice for every supply of taxable goods (barang kena pajak/BKP in Indonesian) and/or taxable services (jasa kena pajak/BKP in Indonesian).

Therefore, it is essential that taxable persons take into account the times tax invoices are prepared as stipulated under Article 13 paragraph (1a) of the VAT Law as last amended by the HPP Law which reads:

"(1a) The Tax Invoice referred to in paragraph (1) must be prepared upon:

1. a supply of Taxable Goods and/or a supply of Taxable Services;
2. receipt of payment if payment is received before the supply of Taxable Goods and/or before the supply of Taxable Services;
3. receipt of term payment in the case of a supply of a part of work phases; or
4. certain times as stipulated by or based on a Minister of Finance Regulation."

Similar provisions are also outlined in Article 3 paragraph (2) of PER-03/2022 as last amended by PER-11/2022.

Referring to your question, it is known that the tax invoice was not issued, and a period of three months has elapsed from the time the tax invoice should have been prepared. As a result, the tax invoice is considered not prepared pursuant to the provisions under Article 33 paragraph (1) of PER-03/2022 as last amended by PER-11/2022.

“(1) Tax invoices are deemed not prepared if the Tax Invoices are prepared after a period of 3 (three) months has passed since the Tax Invoices should be prepared as referred to in Article 3 paragraph (2) or Article 4 paragraph (3).”

As stated by the provisions under Article 33 paragraph (2) of PER-03/2022 as last amended by PER-11/2022, a taxable person preparing tax invoices deemed not prepared will be subject to administrative penalties pursuant to Article 14 paragraph (4) of the General Provisions and Tax Procedures (GPTP) Law. Pursuant to these provisions, the taxable person is subject to a fine of 1% of the tax base (dasar pengenaan pajak/DPP in Indonesian).

Please also note that VAT listed in the tax invoice deemed not prepared constitutes non-creditable input VAT.

Based on the foregoing explanation, several conclusions can be drawn. First, although the company continues to issue the tax invoice for the July 2022 period, the tax invoice remains considered not prepared because a period of three months has elapsed since the tax invoice should have been prepared.

As such, the company does need to issue the tax invoice for the sale in July 2022 as the tax invoice is deemed not prepared. Thus, the company is not required to perform amendments in advance to the tax return for that period.

Second, the VAT listed in the tax invoice cannot be treated as input VAT for the company's counterparty. Even though the company issues a tax invoice and the counterparty pays VAT payable, the tax invoice has been classified as a tax invoice deemed not prepared. Thus, the VAT listed in the tax invoice constitutes non-creditable input VAT.

Third, there is a fine of 1% that must be borne by the company. The penalty will be collected by the DGT through the issuance of a notice of tax collection (surat tagihan pajak/STP in Indonesian). On the other hand, there is no potential penalty for the company's counterparty.

That concludes our response. We hope this information is beneficial. We welcome any further inquiries. Thank you.

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)

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