DGT Reminds Insurance Agents to Prepare Tax Invoices

DENPASAR, DDTCNews - The Directorate General of Taxes (DGT) reminds insurance agents to fulfil their tax obligations. In line with the issuance of the Minister of Finance Regulation (MoF Reg.) 67/2022, insurance agent services are now subject to value added tax (VAT).

Denpasar Medium Tax Office Tax Instructor I Gusti Made Setyawan said that insurance agents, insurance brokers and reinsurance brokers are required to collect, remit and file VAT payable.

“This is a derivative regulation of the Harmonisation of Tax Regulation Law,” said Gusti Made Setyawan as reported by pajak.go.id, Thursday (7/7/2022).

It should be understood that VAT on insurance agent services is imposed at an effective rate of 1.1% of the commission or consideration accrued by the insurance agent. The commission or consideration is the value of the payment before being withheld by Income Tax or other levies.

In summary, 2 tax obligations must be fulfiled by insurance agents in respect of VAT on insurance agent services. First, reporting their businesses to the tax office to be registered as Taxable Persons for VAT Purposes.

Second, after being registered as Taxable Persons for VAT Purposes, insurance agents are required to prepare tax invoices for supplies of insurance agent services.

Gusti added, VAT remittance billing code is manufactured by insurance agents using Remittance Type Code 900 with a description of Domestic VAT collected by withholding agents other than government agencies.

“One billing code for one taxable period,” continued Gusti.

On another note, input VAT on the acquisition of taxable goods and/or services in respect of supplies of insurance agent services cannot be credited by the insurance agents. Thus, the crediting mechanism does not apply for insurance agents in respect of insurance agent services. (sap)