Can a Non-VAT Registered Person Issue an Invoice?

The issuance of a Tax Invoice is a requirement for every taxpayer who has been designated as a VAT-registered person (PKP) and makes the transfer of Taxable Goods (BKP) and/or Taxable Services (JKP). But what if a taxpayer has not been registered as a PKP but transfers taxable goods or services, is it still mandatory to issue a Tax Invoice? Here is the explanation.

Value Added Tax (VAT) is one type of tax that must be collected at the time of the transfer of Taxable Goods (BKP) and/or Taxable Services (JKP).

According to the provisions of the VAT Law (UU PPN), the VAT Withholding slip is the Tax Invoice, which contains several details related to the delivery of BKP and/or JKP, serving as an essential administrative tool in the implementation of VAT provisions.

Definition of a Tax Invoice

It is important to understand that a Tax Invoice is a tax withholding slip made by a PKP that conducts the transfer of Taxable Goods (BKP) or Taxable Services (JKP).

Not all taxpayers are allowed to issue a tax invoice. Only taxpayers who meet the criteria to collect VAT and issue a Tax Invoice are eligible. These taxpayers are known as PKP.

As stated in the VAT Law, a PKP is a business, either an individual or an entity, that transfers BKP and/or JKP. However, not all businesses qualify as PKPs.

Criteria for PKP

According to the regulations, a business with an annual revenue exceeding IDR 4.8 billion within one fiscal year/calendar year is required to report its business for registration as a PKP.

On the other hand, businesses with a revenue not exceeding IDR 4.8 billion are given the option to choose whether to be registered as a PKP or not.

To better understand the PKP registration obligation, it can be illustrated with a simple diagram as follows:

Therefore, businesses that have not been registered as PKP (Non-PKP) are not allowed to collect VAT and issue a Tax Invoice.

Sanctions for Not Issuing a Tax Invoice

According to regulations, Non-PKP that intentionally issue a Tax Invoice will be subject to imprisonment for a minimum of 2 (two) years and a maximum of 6 (six) years, along with a fine of at least 2 (two) times the amount of tax in the Tax Invoice and a maximum of 6 (six) times the amount of tax in the Tax Invoice.

Based on the explanation mentioned, your company, which has not been registered as a PKP, is not allowed to collect VAT or issue a Tax Invoice. If your company still issues a Tax Invoice, it will be considered an abuse involving the issuance and/or use of a Tax Invoice, and you may face criminal sanctions.