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Several macroeconomic indicators showed turmoil in mid-April 2024. The weakening of the rupiah against the US dollar, followed by an increase in gold and commodity prices, is clear evidence that the global economy is experiencing turbulence. On the other hand, the Jakarta Composite Index (JCI) continued to weaken. Liputan 6 (2024) reported that the JCI was in the red zone on Friday, April 19, 2024. The IDX Secretary revealed that the weakening of the JCI had started last week (Okezone, 2024).
However, did you know that value-added tax is payable on stock transactions on the stock exchange? This article will discuss the VAT aspects of stock transactions on the stock exchange.
According to Law Number 8 of 1983 concerning Value Added Tax and Sales Tax on Luxury Goods, as last amended by Law Number 7 of 2021 concerning Harmonization of Tax Regulations, money, gold bullion, and securities are types of goods that are not subject to value-added tax.
Nevertheless, services related to share sales transactions are still subject to VAT because, according to the provisions of Article 4A paragraph (3) of the VAT Law, brokerage services are not exempt from the imposition of VAT.
The technical provisions for VAT imposition on brokerage services are regulated in Director General of Taxes Circular Letter Number SE-15/PJ.5/1990 concerning VAT on Brokerage Services. Based on the circular letter, among others, it is stipulated that brokerage services are taxable services, and VAT is payable on the delivery of brokerage services. The provision also stipulates that entrepreneurs who provide taxable services should be confirmed as taxable entrepreneurs.
Furthermore, through Circular Letter of the Director General of Taxes Number SE-04/PJ.51/1991, the government regulates the technical provisions of Securities Trading Intermediaries (Brokers) as Taxable Persons for VAT Purposes. Through these provisions, among others, it is regulated that securities trading brokerage services carried out by anyone, both banks and non-banks, are taxable services. Thus, entrepreneurs who provide securities trading services must be confirmed as taxable entrepreneurs.
Related to the Tax Imposition Base, the provision stipulates that the Tax Imposition Base for Securities Trading Intermediary is the entire commission, provision, or fee received or should have been received by the Securities Trading Intermediary from both the seller and the buyer. However, please remember that the input tax credited by the securities trading broker is the input tax directly related to the business activities of the broker.
Referring to the Financial Services Authority Regulation Number 24/POJK.04/2016 concerning Securities Trading Brokerage Agents, among others, stipulated that a securities trading broker is a party that conducts business activities of buying and selling securities for the benefit of itself or other parties. A securities brokerage may have an agent whose duty it is to refer prospective customers to the brokerage. Securities brokerage agents can be institutions or individuals who receive commissions based on cooperation contracts.
For example, Mr. X has 500 lots of shares in PT XABCD. Mr. X wants to sell 100 lots of his shareholding at Rp4,000 per share through a broker. The agreed broker commission is 0.3% of the transaction value.
Based on this, the broker will issue a tax invoice with a VAT of Rp66,000. The VAT value of Rp66,000 is obtained by multiplying the number of shares sold by 100 lots of shares, or equivalently 50,000 shares with a share price per share of Rp4,000, a commission proportion of 0.3%, and a VAT rate of 11%. Above is an explanation of VAT on the sale and purchase of shares. You can contact Ideatax if you need further explanation.
