TaxSavvyID

Charging VAT before PKP approval

Kami sudah tagih PPN ke customer sebelum PKP disetujui. Gimana?

The situation

Only a PKP can issue a tax invoice and collect VAT. Charging VAT before approval is not valid.

The law

  • Art 13, Law 8/1983 on VAT and Luxury Goods Sales Tax (PPN Law), as last amended by Law 6/2023: A PKP must issue a tax invoice (faktur pajak) for every taxable supply, in electronic form
  • Art 3A, Law 8/1983 on VAT and Luxury Goods Sales Tax (PPN Law), as last amended by Law 6/2023: A business making taxable supplies must report to be confirmed as a taxable entrepreneur (PKP), except small entrepreneurs who may opt in

What it means for you

If you collected an amount described as VAT, you should refund it or reissue invoices once PKP status starts, as the law allows. Buyers cannot credit VAT without a valid tax invoice.

What to do

  1. Stop charging VAT until approved.
  2. Talk to buyers about refund or reissue.
  3. Issue proper tax invoices from the PKP date.
  4. Keep records of the fix.

VAT collected without remitting it raises serious issues.

We can do this for youVAT registration as a taxable entrepreneur (PKP): the IDR 4.8 billion test, voluntary registration and verification: IDR 2.500.000

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