In this practical era, the need for food and drink provided by catering service entrepreneurs has become a way of life for most people. Starting from daily catering needs for homes, offices, to various events such as weddings, farewells, social gatherings, even charity activities on certain days.
The provision of delicious food and drinks as well as satisfying service has become a standard for every cooking service. Cooking service entrepreneurs must also meet consumer expectations with hygienic presentation (healthy, clean, disease-free) as well as more attractive packaging. This aims to increase consumer interest and trust in cooking services.
Consumers can choose which cooking or catering services suit their needs. With the increasingly high taste and quality of food and beverages offered by cooking service entrepreneurs, it will increase public interest in becoming customers.
Along with the times, the turnover of the cooking services business will certainly increase. However, it needs to be understood, the business of providing catering services is mostly carried out by Micro, Small and Medium Enterprises (MSMEs), not only large business groups in the form of corporations.
Are cooking services not subject to VAT?
In accordance with the provisions of Article 4A paragraph (3) letter q of Law Number 8 of 1983 concerning Value Added Tax on Goods and Services and Sales Tax on Luxury Goods as amended several times, most recently by Law Number 7 of 2021 concerning Harmonization of Tax Regulations, type services that are not subject to Value Added Tax, namely certain services in the following service groups: food or catering services, covering all activities of providing food and beverage services which are objects of regional taxes and regional levies in accordance with the provisions of laws and regulations in the field of regional taxes and levies area.
To provide justice, legal certainty, and alignment of tax objects between central and regional taxes, the Minister of Finance Regulation (PMK) Number 70/PMK.03/2022 was issued concerning Criteria and/or Details of Food and Beverage, Arts and Entertainment Services, Hospitality Services , Services for Providing Parking Spaces, as well as Cooking or Catering Services, Which Are Not Subject to Value Added Tax. This regulation was promulgated on 30 March 2022 and came into force on 1 April 2022.
Article 2 letter c PMK Number 70/PMK.03/2022 states that food and drinks served by cooking or catering service entrepreneurs, which are objects of regional taxes and regional levies in accordance with the provisions of laws and regulations in the field of regional taxes and regional levies, including types of goods that are not subject to Value Added Tax.
Then Article 3 letter d PMK Number 70/PMK.03/2022 also states that certain services in the cooking or catering services group, which are objects of regional taxes and regional levies in accordance with statutory provisions in the field of regional taxes and regional levies, include types of services that are not subject to Value Added Tax.
In Article 4 paragraph (3) PMK Number 70/PMK.03/2022 it further explains that cooking or catering service entrepreneurs as referred to in Article 2 letter c at least carry out the following service activities:
1. the process of supplying raw materials and semi-finished materials, making, storing, and serving based on orders;
2. presentation at the location desired by the customer and different from the location where the manufacturing and storage process is carried out; and
3. presentation is done with or without equipment and personnel.
Furthermore Article 8 PMK Number 70/PMK.03/2022 explains that certain services in the cooking or catering services group that are not subject to Value Added Tax as referred to in Article 3 letter d are service activities that meet the provisions referred to in Article 4 paragraph (3) .
Based on the provisions mentioned above, it can be seen that cooking or catering services are types of services that are not subject to Value Added Tax (VAT), as long as these services are objects of regional taxes and regional levies (PDRD) and fulfill the three terms of service activities listed in Article 4 paragraph (3) PMK Number 70/PMK.03/2022. Likewise with food and drinks served by cooking or catering service entrepreneurs, which are already subject to local taxes, they are included in the types of goods that are not subject to VAT.