MoF Decree No. 41 Year 2023 on VAT on Sale of Collateral Taken Over by Creditor to Collateral Buyer

Ideatax, Jakarta -- On April 11, 2023, the Government issued Ministry of Finance Regulation or Peraturan Menteri Keuangan (PMK) Number 41 Year 2023 on Value Added Tax on Sale of Collateral Taken Over by Creditors to Collateral Buyers.
This regulation is a derivative of 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.

This regulation is also a technical guideline for Government Regulation No. 44 Year 2022 on the Implementation of Value Added Tax on Goods and Services and Sales Tax on Luxury Goods.
However, the issuance of PMK-41 in 2023 was triggered by the numerous tax disputes arising from the execution of collateral by banks/financing companies. This regulation consists of 10 Articles and comes into effect on May 1, 2023.

As a derivative regulation of the VAT cluster in the Tax Harmonization Law, there are numerous matters are regulated in PMK Number 41 Year 2023. Among them are as follows:
- Sale/submission of Collateral by Creditor to Collateral Buyer is included in the definition of transfer of rights on Taxable Goods subject to Value Added Tax.
- The Value Added Tax payable on the delivery of the repossessed Collateral is collected, paid, and reported by the Creditor.
- Upon the delivery of Taxable Goods in the form of Collateral, Creditor is obliged to make Tax Invoice.
- At the time of acquisition of Collateral by Creditor from Debtor, no Tax Invoice is issued.
- Creditor is required to pay Value Added Tax collected by using Tax Payment Slip and/or other administrative means equated with Tax Payment Slip.
- In addition, the Creditor is required to report the sale of the Collateral in the SPT Masa PPN.
- Collateral Buyer may credit Value Added Tax on the purchase of collateral goods.
 

Provisions regarding examples of Value Added Tax collection, remittance, and reporting on the delivery of Collateral taken over by Creditors are regulated in the Appendix to the Ministry of Finance Regulation Number 41 Year 2023.