My curiosity made me immediately open my device and look for more information about the building which is identical to the red color with the snowman logo. Maybe many readers already know what the name of the red building is. The red building with the snowman logo is a franchise owned by Mixue which had become a trending topic in several social media universes. So apparently that there is material for jokes among young people, “Even an empty heart might be rented to become the next outlet.”
About Mixue
Mixue is not an original Indonesian franchise but was founded by Zhang Hongchao from China. He started this business from scratch and worked hard since 1997 with limited capital until he was able to expand his business octopus. Zhang set up Mixue Bingcheng to take care of operations and management, Henan Daka Food to take care of research and production, and Shangdao Intelligent Supply to take care of logistics and warehousing.
These three companies make Mixue’s prices very competitive. They have succeeded in reducing production costs by building a supply chain to managing their own raw material production, warehousing and logistics processes. In this way Mixue was able to cut the costs of third-party intermediaries, keep logistics costs very low, and make Mixue one of the top five most successful franchises in the world.
Mixue also doesn’t need big money to do promotion. Management is aware that store costs are also one of the factors that can erode Mixue’s profitability, so the approach taken is different from its competitors, which open outlets in shopping centers or malls. Instead, Mixue takes a rental approach to small-town shops where rent, labor, and operational costs tend to be lower.
Mixue Taxation Field
In Indonesia, the first franchisee of Mixue was PT Zisheng Pacific Trading, so PT Zisheng Pacific Trading is responsible for all forms of operational activities, whether opening a branch or opening partnership opportunities by buying a franchise. This also includes the taxation aspects contained in each business process flow in accordance with the tax rules or regulations that apply in Indonesia.
Because Mixue’s parent company is in China, which means foreign taxpayers and PT Zisheng Pacific Trading is a franchise holder in Indonesia who is a domestic taxpayer, this opens up the possibility of royalty funds flowing overseas.
Royalties or payments for the use of intangible assets and intellectual property rights are included in Taxable Goods (BKP) so that they are subject to VAT. This is emphasized in Article 4 paragraph (1) letter D of the Law (UU) Harmonization of Tax Regulations of the Value Added Tax (VAT) cluster that VAT is imposed on the use of intangible taxable goods from outside the customs area within the customs area. This also applies to business actors who wish to purchase the F&B Mixue franchise.
Furthermore, in Article 4a paragraph (2) of the Law it is explained, the types of goods that are not subject to VAT are certain goods in the food and beverage group served in hotels, restaurants, restaurants, stalls, and the like, including food and drinks both consumed in place or not, including food and beverages delivered by catering or catering businesses, 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. Thus, on the sale of Mixue drinks, because they are served in a tavern where fees are regulated by the regional government, VAT is not subject to VAT.
Referring to the Income Tax Law (PPh), every service – including royalties received – is included in the PPh Article 23/26 object. Meanwhile, Article 26 paragraph (1) of the HPP PPh Cluster Law confirms that income in the form of royalties received by foreign tax subjects from domestic taxpayers will be subject to Income Tax Article 26 of twenty percent of the gross amount or adjusted according to the Agreement on the Avoidance of Double Taxation (P3B). ).
In the event that there is a special arrangement in the P3B, the tax withholder and/or collector in this case the domestic taxpayer makes withholding and/or collection of taxes in accordance with the provisions in the P3B as long as the Foreign Taxpayer (WPLN) submits a Letter of Domicile of WPLN containing information regarding the provisions referred to in Article 2 of the Regulation of the Director General of Taxes Number PER-25/PJ/2018 have been fulfilled.