Minister of Finance has updated gold tax provisions through the issuance of Minister of Finance Regulation Number 48 of 2023. This regulation, which will take effect on May 1, 2023, was issued to provide legal certainty, fairness, convenience, and simplicity for gold tax. In addition to gold tax provisions, Minister of Finance Regulation Number 48 of 2023 regulates gemstones tax and a sales tax on gold and jewelry. Basically, there are two types of gold tax that are imposed according to this regulation, namely income tax and value added tax.

Gold tax is not a new type of tax. Gold tax regulations have been long been regulated and were most recently regulated in Minister of Finance Regulation Number 34/PMK.010 of 2017 concerning Income Tax on sale of gold bars domestically and Minister of Finance Regulation Number 30/PMK.03/2014 concerning Value Added Tax (VAT) on Gold Jewelry.

Income tax

Income tax is a type of tax imposed on tax subjects for their received or earned income. Gold and jewelry tax subjects who are designated as collectors are gold jewelry traders, gold jewelry manufacturers, and/or gold bar entrepreneurs who are directly involved in the transaction. Income tax is levied on the sale or delivery of:

• Gold jewelry; and/or
• Gold bar.

Income Tax Rate

The above income tax provisions are regulated in Income Tax Law Article 22 (Income Tax Art. 22). Income Tax Art. 22 rate for gold jewelry and gold bar is 0.25% and is not final.

Gold tax is payable and collected at the time of sale. The amount of tax levy is calculated by multiplying tax rate and selling price of gold jewelry or gold bars.

If a gold jewelry businessman also sells jewelry that is not entirely made of gold, gemstones and/or other similar stones, such sale is also subject to Income Tax Art. 22.

However, Income Tax Art. 22 on the sale of gold jewelry or gold bars is not collected, under several conditions, namely:

1. Buyers are final consumers
2. The buyer is an MSME (Micro, Small, and Medium Enterprises) taxpayer subject to final income tax (must have and submit a certificate)
3. The buyer taxpayer has a Certificate of Exemption of Income Tax Art. 22 
4. The gold bars buyer is Bank Indonesia, and
5. Sales of gold bars are carried out through digital gold physical markets.

The above exception is made without Certificate of Exemption.

Income Tax is imposed not only on income derived from the sale of gold, but also on income derived from related fees, specifically in the form of:

• Modification services;
• Repair services;
• Coating services;
• Gilding services;
• Cleaning services; And
• Similar services in other names.

Income Tax Rate

The above income tax provisions are regulated in Income Tax Law Article 21 (Income Tax Art. 21) for individual taxpayers and Article 23 (Income Tax Art. 23) for corporate and Permanent Establishment (PE) taxpayers. Withholding income tax is carried out by service users (parties who pay compensation for services).

The income tax rates charged are as follows:

• Income Tax Art. 21 rates are 5% to 35%
• Income Tax Art. 23 rate is 2%.

Withholding Income Tax Art. 21 or Art. 23 is not carried out if the service provider is an MSME Taxpayer subject to final Income Tax and/or a Taxpayer who has a Certificate of Exemption of Income Tax Art. 21 and/or Art. 23.

If compensation is given in the form of gold (given in kind and/or favors), Income Tax Art. 22 will not be deducted, however, the deduction will be made in accordance with the provisions of taxation laws and regulations.

Value-Added Tax

Value added tax (VAT) is a type of tax that is imposed on the delivery of taxable goods and/or taxable services. VAT Law Article 4A paragraph (2) stipulates that only gold bars submitted for the benefit of the country's foreign exchange reserves are exempt from VAT objects. Therefore, delivery of gold jewelry is definitely subject to VAT.

Aside from gold jewelry, related services are also objects of VAT. These services include:

• Modification services;
• Repair services;
• Coating services;
• Gilding services;
• Cleaning services; And
• Similar services in other names.

As a consequence of VAT imposition on gold jewelry and related services, the provisions of Article 13 Minister of Finance Regulation Number 48 of 2023 require gold jewelry manufacturers and gold traders to report their business and be confirmed as a taxable entrepreneur. Gold jewelry manufacturers and traders who meet small entrepreneur criteria are also required to be confirmed as taxable entrepreneurs.

VAT rates

VAT on gold jewelry is imposed using a certain amount, namely 0-15%, which simply means that it will be less than VAT in general.

The VAT rate with a certain amount for gold jewelry delivery is as follows:

1. Delivery of self-produced gold jewelry by taxable entrepreneur of gold jewelry manufacturers to

• Other gold jewelry manufacturers or gold jewelry traders, namely 1.1%
  (obtained from a certain amount of 10% x general VAT rate of 11%)
• End consumers, namely 1.65%
  (obtained from a certain amount of 15% x general VAT rate of 11%)

2. Delivery of gold jewelry by gold jewelry dealers to

a. Other gold jewelry traders or end consumers, namely

• 1.1% if the trader has a complete Tax Invoice/certain document for the acquisition/import of gold jewelry, and
  (obtained from a certain amount of 10% x general VAT rate of 11%)
• 1.65% if the trader does not have a complete Tax Invoice/certain document for the acquisition/import of gold jewelry
  (obtained from a certain amount of 15% x general VAT rate of 11%)

b. Manufacturer of gold jewelry, namely 0%
(obtained from a certain amount of 0% x general VAT rate of 11%)

3.Delivery of non-gold jewelry and/or delivery of gemstones or other similar stones, namely 1.1%
(obtained from a certain amount of 10% x general VAT rate of 11%)

4. Delivery of related services is 1.1%
(obtained from a certain amount of 10% x the general VAT rate of 11%)

If there is a change in the general rate of VAT, then the rate above will also change.

Imposition of VAT with a certain amount on gold cause the Input Tax associated with the delivery of gold cannot be credited. Furthermore, gold trader taxable entrepreneur who do not use a certain amount in calculating VAT resulting in underpayment of VAT are required to make adjustments. However, if VAT becomes overpaid, taxable entrepreneur can make adjustments (not required).

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