Event Reports

The Transport and Logistics Working Group met on 12 August 2019 to specifically discuss taxation issues for the logistics sector. This meeting is chaired by Mr. Sugyanto Halim, CFO of DB Schenker, as the Deputy Head of the Transport and Logistics Working Group. The first agenda is regarding proposals by EuroCham to revise policy on implementation of VAT and withholding tax in freight forwarding services. These proposals have been developed by the industry since 2015 and well communicated to the relevant government ministries/agencies. In regard to withholding tax proposals, there have not been significant development in terms of policy framework however the Directorate General of Tax is developing the electronic tax slip (e-bukti potong) program to help reduce the administrative burden.

Responding to the proposal on VAT, the Ministry of Finance recently issued Regulation No. 32/2019 that offers zero percent VAT for freight forwarding service on export-oriented goods (and not including the import side). The group overall welcome the latest zero percent VAT incentives, however there are still remining challenges to become eligible to enjoy the zero percent rate. To be eligible for the zero percent rate, companies need to provide written agreement of each international transactions, as well as provide proof of payment from the recipient of exported taxable services abroad which can be difficult due to most multinational forwarding companies implement a netting mechanism with their affiliated counterparts abroad.

Lastly the group also shared latest updates on proposals to reduce administrative burden due to duplication of tax and commercial invoices. Reportedly, even when a company is already directly exchanging data using a special host-to-host system with the DG Tax, there is still a remaining challenge to get some flexibilities from the DG Tax to adjust the automated DG Tax’s electronic tax invoice system so that it can be fully integrated with the commercial invoices.

The Automotive Working Group held their regular meeting on 8th August at EuroCham Office. For this meeting, the group invited representatives from the Directorate General of Tax namely, Mr. Hari Santoso and Mr. Arief from Directorate of Taxation Regulation I to present latest updates and plans for the implementation of the Super Deductible Tax program as stipulated by Government Regulation No. 45/2019, especially in the context of the automotive sector. The super deducible tax program offers up to 200 % tax reduction for application of internship and vocational training by the private sectors, moreover this program also offers up to 300% tax reduction for research and development. In this regard, few members of the Automotive Working Group as individual companies already implement their own internship or vocational training and therefore would welcome the upcoming issuance of implementing regulation by Ministry of Finance that regulates further the procedures to participate in the Super Deductible Tax program.

As a second agenda, an internal group discussion was chaired and moderated by Mr. Daniel Purba of Mercedes Benz as the Head of the Working Group. Topics discussed among other were latest development of policy framework on CO2 emission-based taxation, revision of CKD import requirements, ASEAN MRA, IKD scheme, and import provision of iron and steel.