Proceedings of the 3rd International Conference on Administrative Science, Policy, and Governance Studies, ICAS-PGS 2019, October 30-31, Universitas Indonesia, Depok. Indonesia

Research Article

Implementation of Value Added Tax Policy on Pharmaceutical in Indonesia

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  • @INPROCEEDINGS{10.4108/eai.30-10-2019.2299412,
        author={Titi Muswati Putranti and Amri, Rafli},
        title={Implementation of Value Added Tax Policy on Pharmaceutical in Indonesia},
        proceedings={Proceedings of the 3rd International Conference on Administrative Science, Policy, and Governance Studies, ICAS-PGS 2019, October 30-31, Universitas Indonesia, Depok. Indonesia},
        publisher={EAI},
        proceedings_a={ICAS-PGS},
        year={2020},
        month={8},
        keywords={tax policy value added tax neutrality efficiency pharmaceutical},
        doi={10.4108/eai.30-10-2019.2299412}
    }
    
  • Titi Muswati Putranti
    Amri, Rafli
    Year: 2020
    Implementation of Value Added Tax Policy on Pharmaceutical in Indonesia
    ICAS-PGS
    EAI
    DOI: 10.4108/eai.30-10-2019.2299412
Titi Muswati Putranti1,*, Amri, Rafli1,*
  • 1: Universitas Indonesia, Indonesia
*Contact email: titi.putranti@gmail.com, amri.rafli@gmail.com

Abstract

This study aims to analyze the differences in treatment of value-added tax (VAT) on the delivery of pharmaceutical preparations from a pharmaceutical wholesaler (Pedagang Besar Farmasi/PBF) to private and government hospital pharmacy installation (Instalasi Farmasi Rumah Sakit/IFRS) with using post-positivist approach. Qualitative data collection will be analyzed with quantitative technical analysis. The VAT policy on the delivery of pharmaceutical preparations has two VAT collection techniques, a self-assessment system and withholding tax system. The results of this research show that a withholding tax system is a form of deviation from the normal mechanism. However, the government realized that the withholding tax system needed to be done given the low level of taxable entrepreneur (Pengusaha Kena Pajak/PKP) compliance. Administratively, the withholding tax system that applied to the delivery of pharmaceutical preparations also results in inefficiencies in both the PBF business and government revenue.