MoF Regulation No.70/PMK-03/2022 (“PMK-70”) outlines those deliveries of food and beverages (“F&B”), catering services, art and entertainment services, hotel services, and parking services which are not subject to VAT.
This treatment is because these goods and services are already subject to Regional Tax and so the VAT exemption is to avoid double taxation. The criteria are as follows:
A. Food and beverage
This includes F&B served (either dine-in or takeaway) in hotels, restaurants, etc., and F&B served pursuant to catering services.
The restaurant must provide F&B serving facilities such as tables, chairs, and/or tableware for dine-in purposes.
A catering services provider must:
a) carry out material procurement, preparation, storage, and serving based on a customer order;
b) serve at a location instructed by the customer that is different from the location of the preparation and storage; and
c) provide the service with or without tableware, etc.
F&B provided by F&B factories, airport lounges, supermarkets, etc. (which do not sell only F&B) are VATable.
B. Catering services
The criteria for non-VATable catering services are as per the requirements listed above.
C. Art and entertainment services
PMK-70 provides 12 types of non-VATable art and entertainment services. These include exhibitions, art performances, and game sports with dedicated gaming area and equipment.
The following is excluded from non-VATable art and entertainment services:
a) the provision of golf areas and equipment;
b) the provision of movie or other audio-visual streaming through the internet or electronic channels.
D. Hotel services
Non-VATable hotel services are those involving room or space rental in hotels, villas, resorts, etc. Room rental includes accommodation and incidentals such as room service, extra beds, laundry, sport facilities, hotel transportation, etc. Space rental under this category includes rental for events or meetings.
Not included as non-VATable hotel services include:
a) space rentals other than for events or meetings such as rental for ATMs, offices, banking facilities, etc.;
b) unit or space rental (including related facilities) in apartments, condominiums, etc. – which is differentiated from general hotel services based on licensing; and c) travel services provided by hotel management.
E. Parking services
Non-VATable parking services are the provision of parking spaces and valet parking. Parking space management services provided to parking space owners for a fee are subject to VAT.
