Presenting Proposals on VAT in International Freight Forwarding Services

On Friday 2 March 2018, Mr. Carlo Brix Tewu as the Secretary of the Government’s Working Group IV facilitated a stakeholder meeting between EuroCham Transport and Logistics Working Group, Directorate General of Tax and Fiscal Policy Agency. EuroCham which was represented by Ms. Ratna Dewi (A. Hartrodt), and Mr. Irwan Kurniawan (DHL) presented a joint proposal submitted with the Indonesia Logistics and Forwarder Association (ALFI) on VAT in International Freight Forwarding Services.

Some of the industry’s recommendations are to align Indonesia’s taxation regime with international best practices, which adhere to a zero-rate for international-freight services. EuroCham also recommended the issuance of detailed guidelines in order to clarify the separation of the international and domestic legs of any international shipments. Currently, objections are often raised with tax authorities as regards to what items are chargeable at the 10% VAT rate, as well as what can be re-claimed as it is passed on to end users. A follow up meeting is currently being arranged by a small tax team within the Transport and Logistics Working Group and ALFI to consolidate a study on current conditions and proposals from the industry, to be presented to the policy makers.

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