The issuance of Regulation of The Minister of Finance of The Republic Indonesia (PMK) Number 6 of 2021 has become a hot topic in Indonesia since the end of January 2021. The regulations, which came into effect on February 1, 2021, were enacted on January 22, 2021 to simplify the administration and mechanism of collecting Value Added Tax (VAT) for the delivery of mobile data by operators as well as Income Tax on delivery or income in connection with the sales of mobile data, SIM cards, tokens, and vouchers.
Responding to this, several cellular operators are still studying the contents of the rules further to find out the implications in their product and service business schemes and continue to strive to provide quality services at affordable prices [1]. As reported on the CNBC Indonesia news page, INDEF Economist Bhima Yudhistira even said that the imposition of VAT and Income Tax is considered to have an impact on price increases at the consumer level. This regulation might hinder the digitization process and is counterproductive to the current tax policy which provides tax stimulus for the public and businesses amid the pandemic.
Actually, the tax regulation in this PMK does not create new tax objects because the sales of mobile data, SIM cards, vouchers, and electricity tokens have been subject to VAT at 10% in accordance with the previous VAT law. The existence of this PMK actually provides stronger legal certainty by providing certainty on such regulation.
The Minister of Finance has also appealed to the public not to be too worried because it will not affect the price of mobile data, SIM cards, vouchers, and electricity tokens [3]. Small distributors and retailers do not need to worry because the stipulation of regulations is not aimed at ordinary distributors or even mobile data retailers. In simplifying this taxation regulation, the collection of VAT is only up to the Level II Distributor (server), so there is a reduction in the VAT collection mechanism that was previously carried out up to the last chain.
In this regard, the issuance of this rule eliminates disparity in retailers while simultaneously providing taxation treatment from Level II Distributors (servers) to retailers because Level II Distributors (servers) are the final party authorized in the business chain to collect VAT. On the other hand, the existence of this rule requires Level II Distributors as the party collecting VAT to be confirmed as a Taxable Entrepreneur. Then, how is it related to the provisions of Article 3A of the VAT Law and Article 4 paragraph (1) of PMK Number 197 of 2013 concerning a Taxable Entrepreneur gross revenue limits if it turns out that Level II Distributors' gross receipts do not meet this minimum limit?
Value Added Tax for Sales of Mobile Data, SIM Cards, Tokens and Vouchers
The taxable goods referred to in this PMK are mobile data and SIM card both in the form of physical and electronic vouchers, as well as electricity tokens in accordance with the provisions of laws and regulations in the field of taxation (upon handing over tokens to electricity customers directly or through Distribution Operators by the Electricity Provider exempt based on the provisions of laws and regulations in the field of taxation).
Some of the taxable services contained in this PMK are related to these activities that are subject to VAT, including:
- Provision of payment transaction related to Token distribution by Distribution Operators;
- Voucher media marketing services by Voucher Operators;
- Provision of payment transaction related to voucher distribution by voucher operator and distribution operator; or
- Customer loyalty/reward program services by Voucher Operators
The following transactions are not subject to VAT:
1. Presentation of awards in the form of points (point reward) by:
- Customer-owner (principal to Buyer and/or Service Recipient as customer; and
- Buyers and/or service recipients as customers to voucher operators,
2. Submission of Vouchers by:
- Voucher Operators to Distribution Operators, Buyers, and/or Service Recipients;
- Distribution Operators to subsequent Distribution Operators, Buyers, and/or Service Recipients; and/or
- Buyers and/or Service Recipients to traders or service providers and/or PPM SE,
3. Delivery of rewards in the form of cash by Voucher Operator to the Buyer and/or Service Recipient
Article 4 of PMK Number 6 of 2021 details the parties who are subject to VAT on the delivery of mobile data and SIM cards and the parties who are entitled to collect VAT. Whereas the details of the parties entitled to collect VAT in relation to Taxable Services are provided in Article 6 for the implementation of payment transaction services related to token distribution, Article 7 for marketing services with media vouchers, Article 9 for the delivery of payment transaction services related to voucher distribution, and Article 11 for implementing customer loyalty and reward programs (consumer loyalty/reward programs).
The determined VAT rate is 10% of the tax base, namely
- Selling Price, which is equal to the payment value billed by the Telecommunication Service Provider or Distribution Operator
(Delivery of Taxable Goods in the form of Mobile data and SIM cards by Telecommunications Service Providers or Distribution Operators at First Level) - Another value, namely the amount charged by the Second Level Distribution Operator to the Next Level Distribution Operator
(Delivery of Taxable Goods in the form of Mobile datas and SIM cards by the Second Level Distribution Operator to telecommunications customers through the Next Level Distribution Operator) - Selling price
(Delivery of Taxable Goods in the form of Mobile data and SIM cards by the Second Level Distribution Operator to telecommunications customers directly) - Commission or administrative income or the difference between the nominal value of the Token and the value requested
(Tax Imposition Basis for the delivery of Taxable Services in the form of payment transaction services related to Token distribution) - Commission or compensation received if its delivery is based on a commission or reward; or the difference between the invoiced value and the value paid for the sale of the voucher if its delivery is not based on the award of a commission; or compensation or replacement or other value, which is 10% (ten percent) of the amount invoiced or that should be invoiced, if the delivery is not based on commission and there is no margin.
(Delivery of Taxable Services in the form of marketing services with Vouchers media; or services for providing payment transaction services related to voucher distribution; or services for administering customer loyalty and reward programs (consumer loyalty/reward programs))
Article 15 requires Telecommunication Service Providers, Distribution Providers, and Voucher Operators who have been confirmed as Taxable Entrepreneur to make a Tax Invoice for the submission of BKP and JKP contained in this PMK. The tax invoice in question can be in the form of receipt of payment as long as it has met the formal requirements of the Tax Invoice and includes the identity of the party receiving the BKP and/or JKP submission, namely Taxpayer Identification Number of ID Card Number.
Income Tax for Sales of Mobile Data, SIM Cards, Tokens, and Vouchers
PMK Number 6 of 2021 regulates the mechanism for calculating and collecting Income Tax in Article 18 for Income Tax Article 22 and Article 19 for Income Tax Article 23. For the sales of mobile data and SIM cards by the Second Level Distribution Organizer who is an Income Tax Article 22 Collector, Article 22 of Income Tax is levied in the amount of 0.5% of the value charged by the Level II Distribution Operator to the Next Level Distribution Operator or Selling Price, on sales to customers directly. However, this collection is not made on payments by Next Level Distribution Operators or customers having the conditions below:
- The maximum amount is IDR2,000,000,00 (two million rupiahs), excluding VAT and is not a payment divided from a transaction with actual value of more than IDR2,000,000,00 (two million rupiahs);
- Is a bank taxpayer; or
- Own and submit a copy of Income Tax Certificate based on Government Regulation Number 23 of 2018 and its validity has been confirmed in the information system of the Directorate General of Taxes.
Whereas for income in the form of services, namely:
- Provision of payment transaction service related to Token distribution by Distribution Operators;
- Voucher media marketing services by Voucher Operators;
- Provision of payment transaction service related to voucher distribution by the voucher operator and distribution operator; or
- Customer loyalty/reward program services by Voucher Operators
What is received by Distribution Operators and/or Voucher Operators must be deducted by Income Tax Article 23 by 2% of the gross amount, excluding VAT, namely the total amount of compensation in the form of commissions or other similar payments paid in connection with the services provided; or the difference between the invoiced value and the value paid for the voucher sales if the services rendered are not based on the provision of compensation in the form of commissions or other similar payments. However, this collection is not carried out if:
- Income paid or payable to the bank; and/or
- Payments in connection with these services have been subject to Final Income Tax based on the tax laws and regulations.
To make it easier to understand the rules for VAT and Income Tax Sales for mobile data, SIM cards, Tokens and Vouchers, check the comparison matrix for PMK 6/2021 rules with the previous Taxation rules at the following link. Matrix of Difference in PMK Number 6 Year 2021 with Previous Taxation Regulations.
Examples of VAT collection on submission of mobile data and SIM cards can be found in the Attachment to PMK Number 6 of 2021
PT A is a Telecommunication Service Provider, PT B is the authorized distributor of mobile data from PT A (First Level Distribution Operator), PT C is a mobile data server operator (Second Level Distribution Operator), PT D is a master mobile data dealer (Distribution Operator). Next Level), PT E is a mobile data retailer (Next Level Distribution Operator), and Mr. X and Mrs. Y are customers.
On January 2, 2021, PT A received a deposit related to the sale of mobile data and/or SIM cards in the amount of IDR10,000,000,00 from PT B. On January 3, 2021, PT A sold SIM cards and mobile data at PT A's official outlets to Mr. X for IDR15,000,00. VAT collection on delivery of mobile data and/or SIM cards by PT A is illustrated as follows:
- PT A as a Taxable Entrepreneur is required to collect VAT on the delivery of Mobile data and/or SIM cards to PT B on January 2, 2021, in the amount of 10% x IDR10,000,000,00 = IDR 1,000,000,00.
- On January 3, 2021, PT A is required to collect VAT on the delivery of SIM cards and Mobile data to Mr. X in the amount of 10% x IDR15,000,00 = IDR 1,500,00.
On February 8, 2021 PT B received a deposit related to the sale of mobile data and/or SIM cards of IDR 9.000.000.00 from PT C. Therefore, PT B as Taxable Entrepreneur is obliged to collect VAT on the delivery of mobile data and/or SIM cards to PT C on February 8, 2021, amounting to 10% x IDR 9,000,000,00 = IDR900,000,00.
On March 2, 2021, PT C received a deposit related to the sale of mobile data and/or SIM cards from PT D in the amount of IDR8,000,000,00. On March 17, 2021 PT D received a deposit related to the sales of mobile data and/or SIM cards from PT E in the amount of IDR15,000,00. Then on March 23, 2021, PT E sold mobile data in denominations of IDR10,000,00 to Mrs. Y for IDR12,000,00
VAT collection for the delivery of mobile data and/or SIM cards by PT C, PT D, and PT E is explained as follows:
- For the delivery of Mobile data and/or SIM cards by PT C to PT D, PT D to PT E, and PT E to Mrs. Y, PT C must collect 1 (one) time as Taxable Entrepreneur on March 2, 2021.
- The VAT collected by PT C as referred to in letter a is 10% x IDR8,000,000,00 = IDR800,000,00.
- PT D and PT E no longer collect VAT on delivery of mobile data and/or SIM cards
Examples of Income Tax Article 22 collection on sales of prepaid mobile data and SIM cards are listed in Attachment PMK 6 of 2021
PT C is the operator of the mobile data server and PT E is the mobile data retailer. PT E does not have an Income Tax Certificate based on Government Regulation Number 23 of 2018. During March 2021, PT E deposited with the following details:
- March 2, 2021, amounting to IDR8,000,000,00;
- March 17, 2021, amounting to IDR1,500,000,00; and
- March 23, 2021, amounting to IDR 5,000,000,00.
The obligation to collect Income Tax Article 22 by PT C on payments (including deposits) of PT E during March 2021 is as follows:
- On March 2, 2021, Income Tax Article 22 payable is 0.5% x IDR8,000,000,00 = IDR40,000,00;
- March 17, 2021, Income Tax Article 22 is not payable because the payment is not more than IDR2,000,000,00;
- March 23, 2021, Income Tax Article 22 payable is 0.5% x IDR5,000,000,00 = IDR25,000,00;
- On March 31, 2021, PT C collected Income Tax Article 22 and was required to produce proof of collection of Income Tax Article 22 on sales to PT E amounting to IDR65,000,00 for the Tax Period of March 2021; and
- PT C is required to deposit Article 22 Income Tax collection during the March 2021 Tax Period of IDR65,000,00 and report the Article 22. Income Tax collection in the Tax Return Article 22 for the Tax Period March 2021. The period for depositing and reporting Income Tax Article 22 is in accordance with the provisions of the legislation in the field of taxation.
