VAT on Public Transport Services

VAT on Public Transport Services

PPN - 20 Apr, 2023 09:04 WIB

Ideatax, Jakarta -- Eid al-Fitr (Lebaran) is just around the corner. Markets, malls, and various shopping centers are starting to be packed with people. As in previous years, the homecoming and return flows have become an inseparable part of Eid in Indonesia. Therefore, the Government has prepared facilities and infrastructure for the smooth flow of homecoming and return of Lebaran 2023.

 

The Ministry of Transportation, Budi Karya Sumadi, said that the peak prediction of Lebaran homecoming flow in 2023 will occur on April 19-21, 2023. (Bisnis.com, 2023) In fact, PT Jasa Marga said that the number of vehicles predicted to cross the Jakarta-Cikampek toll road reached 138,000 vehicles.  This number is up 2% from the peak of the homecoming flow in 2022 with the number of vehicles passing 135,000 vehicles. (Kompas, 2023).

 

There is an interesting fact behind the homecoming and return flow planning in 2023. Did you know that public transportation on land and water and domestic air transportation services are exempt from VAT? This provision is stipulated in Article 4A Paragraph (3) Letter J of Law Number 8 Year 1983 which stipulates that public transportation services on land and water as well as domestic air transportation services which are an integral part of foreign air transportation services are exempted from the imposition of VAT.

 

 The Ministry of Finance Regulation No. 80/2012 on Public Transportation Services on Land and Public Transportation Services on Water that are Not Subject to Value Added Tax, stipulates that public transportation services on land that are exempt from the imposition of VAT include public transportation services on roads and public transportation services on trains.

 

In general, public transportation services on the road are defined as the activity of moving people and/or goods from one place to another by using Public Motor Vehicles in the road traffic space for a fee. Included in this definition are public transportation services using buses, taxis, trucks, cars and so on.

 

Meanwhile, railroad public transportation services are defined as the activity of moving people and/or goods from one place to another by using a train, for a fee. Not included in the definition of rail transportation services that are not subject to VAT are rail transportation services that are rented or chartered. Thus, long-distance trains, electric trains, KRL, and monorail are included in the definition of railway public transportation that is exempt from VAT.

 

On the other hand, water transportation services exempted from VAT include public transportation services at sea, public transportation services on rivers and lakes, and crossing public transportation services. By definition, public transportation services at sea are the activities of moving people and/or goods from one place to another by ship, in 1 (one) trip or more than 1 (one) trip, from one port to another port for a fee. For example, freight transportation services by sea from the port of Tanjong Priok Jakarta to the port of Tanjong Perak Surabaya are not subject to VAT.

 

Moreover, public transportation services on rivers and lakes are the activities of moving people and/or goods from one place to another by using ships, which are carried out on rivers, lakes, reservoirs, swamps, canals, or canals, for a fee.

 

On the other hand, crossing transportation services are defined as the activity of moving people and/or goods from one place to another by using a ship, which functions as a bridge connecting road networks and/or railroad networks separated by waters, for a fee. For example, crossing services from Merak Port to Bakaheuni Port are not subject to VAT.

 

Although in general, public transportation services on land and water are not subject to VAT, public transportation services on land and water using rented or chartered vehicles are subject to VAT. In addition, goods delivery services in the form of package and cargo delivery are also services subject to VAT. So, you need to be observant in determining whether a service is subject to VAT or not. To get more detailed information, you can contact Ideatax.

 

 

Related regulations

  • Law Number 8 of 1983 concerning Value Added Tax and Sales Tax on Luxury Goods as Amended by Law Number 7 of 2021 concerning Harmonization of Tax Regulations.

  • Government Regulation No. 44 of 2022 concerning the Implementation of Value Added Tax on Goods and Services and Sales Tax on Luxury Goods.

  • Ministry of Finance Regulation Number 80/PMK.03/2012 on Land Transportation Services and Water Transportation Services that are Not Subject to Value Added Tax.

 

References

Bisnis.com. (2023, April 05). Ekonomi. From Bisnis.com: https://ekonomi.bisnis.com/read/20230404/98/1643723/ini-prediksi-puncak-arus-mudik-lebaran-2023-awas-macet

Kompas. (2023, April 05). Catat, Ini Prediksi Puncak Arus Mudik 2023 Menurut Polri dan Jasa Marga. From Kompas: https://www.kompas.com/tren/read/2023/04/04/183000565/catat-ini-prediksi-puncak-arus-mudik-2023-menurut-polri-dan-jasa-marga?page=all

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