Heavy equipment are machine used to assist heavy-duty construction and civil engineering work which are operated using motors. Heavy equipment are mostly used in construction, plantation, forestry, and mining areas. Based on Law on Financial Relations between the Central Government and Regional Governments Law Article 17, heavy equipment is subject to tax.
Heavy equipment tax is a tax levied on ownership and/or control of heavy equipment. The tax base is the selling price of heavy equipment based on the general market average price. General market average price is the average price form several accurate sources in the first week of December of the previous Fiscal Year. This type of tax is levied by the provincial government.
Determination of tax base is regulated in a Regulation of the Minister of Home Affairs after receiving consideration from the Minister of Finance. The tax base will be reviewed at most every 3 years by considering the price index of economic development. Heavy equipment tax rate is set at a maximum of 0.2% based on a Regional Regulation.
The principal amount payable of heavy equipment tax is calculated by multiplying tax base with tax rate for 12 consecutive months. Directorate General of Taxes states that "In a force majeure event that the use of heavy equipment has not yet reached 12 months, Taxpayer may apply tax refund for the portion of the period that has not been passed”. Further provisions regarding the procedure for implementing a tax refund will be regulated by Governor Regulation.
