Input VAT rules relaxed
A regulation issued by the Indonesian government on 17 February 2021 includes a relaxation of the VAT rules on input tax, with a view to attracting investment.
An Indonesian taxpayer may now claim input VAT arising from the purchase of taxable goods and/or services before the taxpayer has registered as a VAT entrepreneur. The claimable input VAT amount is 80% of the output VAT.
In addition, a VAT entrepreneur may claim input VAT arising from the purchase or utilization of taxable goods and/or services before it commences commercial business operations. The input VAT generally may be claimed for up to three years, although for manufacturing companies and certain national strategic projects, this period can be granted for up to five and six years, respectively. Previously, input VAT incurred before registration was not creditable and input VAT incurred in the pre-operating stage could be credited only on the purchase of capital goods if certain requirements were met.