Home MONEY & FINANCE DJP Imposes Lower Tax Rates on Collateral Goods in Auctions to Boost...

DJP Imposes Lower Tax Rates on Collateral Goods in Auctions to Boost Financial Sector

Jokowi Just Signed New Regulation Regarding Income Tax

The Directorate General of Taxes (DJP) of the Ministry of Finance has recently revealed that the Indonesian government is currently imposing a Value Added Tax (VAT) of 1.1% on the purchase of collateral goods.

Yoga Saksama, the Director of Tax Regulation, explains that auctions have previously been subject to VAT. The imposition of VAT on the sale of collateral taken over by financial institutions is clearly regulated in Government Regulation No. 44/2022 concerning the Application of VAT and Luxury Goods Sales Tax, which is further detailed in Minister of Finance Regulation No. 41/2023.

According to Article 3, Paragraph (4) of the Minister of Finance Regulation, a specific amount for VAT on auctioned goods is set at 10% of the rate as stipulated in Article 7, Paragraph (1) of the Value Added Tax Act (VAT Law), multiplied by the tax base in the form of the auctioned goods’ selling price. Under the updated VAT Law in Law No. 7/2021 concerning the Harmonization of Tax Regulations, the current VAT rate is 11%.

Yoga explained during a Media Briefing held at the DGT Building in Jakarta on Thursday, May 11, 2023, that imposing an 11% VAT on financial institutions’ sales of collateral goods made it difficult for banks to sell the goods, which is why the government is implementing a specific amount of 1.1% for VAT.

“We discussed with the Financial Services Authority, banks, and the right financial institutions on how to properly implement this specific amount,” said Yoga.

This means that the VAT rate for auctioned goods is 10% of the 11% VAT rate, which is 1.1%. This tariff is lower than the VAT rate imposed on other goods and services, such as food and beverage and financial services, which is 11%.

Yoga revealed that before the implementation of the 1.1% specific VAT amount, many financial institutions did not impose VAT when the VAT rate was 11% because it would make the price too high. Therefore, the sale of collateral goods taken over by financial institutions to buyers now uses a specific tariff of 1.1%.

In essence, the Indonesian government is implementing a new VAT rate of 1.1% on collateral goods purchased through auctions, which is significantly lower than the previous rate of 11%.

This measure aims to make it easier for financial institutions to sell the goods without making the prices too high for buyers. By implementing this specific tariff, the government hopes to increase revenue from VAT while also ensuring that financial institutions can easily sell collateral goods.

Open chat
20% off today!
Chat live (24/7) with Editor now!
Hey! 20% off on all shop items today. Whatsapp Now!
Exit mobile version