Indonesia introduces new electronic VAT invoicing system

According to Taxand Indonesia, the first stage of the new electronic VAT invoicing system only applies to 45 companies, mostly foreign investment companies, state-owned enterprises and publicly-listed companies.

However, Taxand adds that all multinational companies should prepare by: investigating the features in their accounting software in order to ascertain if upgrades are needed to be compatible with the e-VAT invoice application system, and by taking note that the selling process will be longer since the Directorate General of Taxes (DGT) has to approve the e-VAT invoices issued, therefore corporations need to factor this in when producing business plans and schedules.

The newly introduced regulation provides the following points: the e-VAT invoice must be issued via the electronic application system determined or provided by the DGT; the e-VAT invoice must use an electronic signature; the e-VAT invoice must use the Indonesia rupiah (IDR) as currency (if the transaction is denominated in a foreign currency, it has to be converted into IDR); the hard copy version of the VAT invoice can be accepted only in a ”force majeure” situation; and the use of the e-VAT invoice must be reported to and previously approved by the DGT

Moreover, DGT Decision Letter No. 136/PJ/2014 unveils that the use of e-VAT invoice will be implemented in 3 stages. Thus, starting July 1, 2014, it will be mandatory for the selected 45 corporate taxpayers to issue the e-VAT invoice; starting July 1, 2015, it will be mandatory for all corporate taxpayers registered in the 17 regional tax offices in the islands of Java and Bali; and finally, starting July 1, 2016, it will be mandatory for all corporate taxpayers to implement the e-VAT invoice.