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According to Undang-Undang No. 42 Year 2009 on Value-Added-Tax (VAT), all businesses, whether individuals or companies (CV/PT) engaging in the trades of Barang Kena Pajak (BKP) and Jasa Kena Pajak (JKP), are required to collect VAT starting from the date of Surat Pengukuhan Pengusaha Kena Pajak (PKP) issued by the Directorate General of Taxes (DJP).
Categories of Business Required to Collect VAT
1. Annual Gross Turnover / Revenue Exceeding Rp4,800,000,000
If the gross turnover / revenue exceeds Rp4,800,000,000 in a tax year, the taxpayer must immediately register to be appointed as Pengusaha Kena Pajak (PKP).
2. Appointed as PKP by Ruling from Directorate General of Taxes (DJP)
When the gross turnover / revenue exceeds Rp4,800,000,000 in a tax year, but the taxpayer does not register to be appointed as a PKP, the Directorate General of Taxes (DJP) may independently appoint the taxpayer as a PKP through ruling. This appointment would be based on data and information from the Monthly and Annual Tax Returns (SPT) submitted by the taxpayer.
3. Voluntarily Register to be PKP
Most taxpayers typically reluctant becoming a PKP. However, some choose to become a PKP even when their annual gross turnover / revenue has not exceeded the Rp4,800,000,000 threshold. One of the common reasons for this is that their customers might require Faktur Pajak for their purchases.
Differences Before and After Becoming VAT Collector
After receiving PKP status, there are several differences in tax administration:
A) Invoice
Before receiving PKP status, taxpayers are not required to include their identity (company name, Tax ID, address) on their sales invoices. However, after becoming a PKP, taxpayers must include these on their sales invoices for the documents to be considered as valid.
B) Faktur Pajak (Tax Invoice)
Before receiving PKP status, taxpayers are not required to issue Faktur Pajak for their sales. However, after becoming a PKP, taxpayers must issue a Faktur Pajak for every sales transaction.
C) VAT In (from Purchases)
Before receiving PKP status, taxpayers cannot credit the VAT In paid on purchases transactions. However, after becoming a PKP, taxpayers can utilize VAT In paid to credit (or offset) the VAT Out from sales transactions.
D) SPT PPN (VAT Tax Return)
After receiving PKP status, taxpayers will have an additional tax administration work, which is to file a VAT Tax Return (SPT PPN) every month.
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