- The Minister of Finance has issued Regulation No. 41 of 2023 on Value-Added Tax on Deliveries of Collateral Delivered by Creditors to Collateral Buyers, which is set to come into force on 1 May 2023.
- Deliveries of collateral by creditors to the buyers of said collateral are addressed under the definition of transfers of rights over taxable goods subject to value-added tax (Pajak Pertambahan Nilai – "PPN").
- Said collateral comprises collateral that is taken possession of by creditors in relation to credit settlements, financing based on sharia principles or loans that are based on pawn law.
- PPN that is payable in relation to deliveries of collateral should be collected, deposited and reported by the relevant creditors. Collections should be completed at the time of receipt of payments by creditors from buyers of collateral for the delivery of said collateral. In this regard, a payable PPN of 10% of the relevant tariff should be collected and deposited, as specifically set out under Law No. 8 of 1983 on PPN on Goods and Services and Sales Tax on Luxury Goods, which has been amended several times, most recently through the issuance of Law No. 7 of 2021 on the Harmonization of Tax Regulations, which is the basis for the imposition of tax on the sales prices of collateral.
- Creditors that comprise taxable businesses that operate in accordance with provisions set under relevant laws and regulations that apply within the field of taxation are required to draw up tax invoices for deliveries of taxable goods in the form of collateral.
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