Indirect tax

Indirect tax - Indonesia

01 Jan 20259 min read

This tax guide provides an overview of the indirect tax system and rules to be aware of for doing business in Indonesia.

Indirect tax snapshot
What are the current rate(s) of VAT?	The general VAT rate is 12%. The VAT rate of 0% (zero per cent) is applied to the following particular taxable events: export of taxable goods, export of intangible taxable goods, export of particular taxable services, ie: toll manufacturing, repair and maintenance services related to the movable goods utilised outside the customs zone, construction service related to the immovable goods that located outside customs zone. Special VAT rates Particular businesses or activities are subject to output VAT based on a deemed percentage of transaction value and are not entitled to claim credits for the input VAT incurred: Travel Agent 1,1% Courier Service 1,1% Crypto asset 0.12%/0,24%(for transactions by unlisted exchanger) Crypto mining services 1,2% Self-Construction 2,2% Used cars retailer 1,1% Gold jewellery retailer 1,8%
Are there any confirmed or anticipated changes to these rates?	No.
What is the principal indirect tax?	Value Added Tax (VAT) is the principal indirect tax and broadly applied for import as well as for domestic transactions in Indonesia. On top of VAT, particular transactions/goods will also deal with import duties, sales tax on luxury goods and/or super luxury goods tax.
Is there a registration limit for the tax?	Yes.
Does the same registration limit apply to non-established businesses?	There is no requirement for VAT registration for businesses that are not established in Indonesia, unless they have a permanent establishment in Indonesia that earns VATable income.
Does a non-established person need to appoint a fiscal representative in order to register?	Not applicable.
How often do returns have to be submitted?	VAT returns should be submitted monthly. However for Value Added Tax Collector (ie Government Treasurer, corporate, or Government agency designated by the Minister of Finance) who doesn’t have a collected VAT transaction or has a transaction which is not subject to VAT or exempted from VAT or not qualified for VAT, do not have the obligation to submit the Vat return.
Are penalties imposed for the late submission of returns/payment of tax?	Yes. Penalty of IDR500,000 per VAT tax return for late submission and around 2% per month or part of the month for late payment of VAT payable (based on monthly interest rate issued by the Minister of Finance) calculated from the due date until the date of payment, max. 24 months. Additionally, penalty of around 2% per month or part of the month for late payment of voluntarily revision on VAT payable, calculated from the due date until the date of payment.
Are any other declarations required?	Generally no, the taxpayer should only submit VAT return on a monthly basis, unless the taxpayer is (also) appointed as VAT collector.
Are penalties imposed in other circumstances?	Yes. Penalties of 2% from the transaction value can be imposed for late issuance of VAT invoice or issuing incorrect VAT invoice.
Can the tax incurred by overseas businesses be claimed if they are not registered in your country?	No.
Deduction of VAT	A VAT invoice is an instrument to charge VAT (for the seller/deliverer of goods/renderer of services) and to claim VAT credit (for the recipient that has been confirmed as VATable entrepreneur). VAT involves detailed and strict administrative compliance requirements. The format and contents of a VAT invoice must follow guidelines set by the Indonesian Tax Authority which issuance should be done through e-VAT Invoice system. Incomplete and/or incorrect preparation of a VAT invoice can cause it to be considered deficient and thus subject to penalties for the seller and disallowed as credit for the buyer. Particular transactions may generate VAT that will not be available for credit. These situations include among others: VAT incurred prior to the entrepreneur being registered for VAT, VAT incurred before the entrepreneur starts production, except from the acquisition of capital goods, VAT on purchases with no direct connection to the conduct of the company’s business, VAT imposed by way of tax assessments, defective VAT invoices, purchase and maintenance of sedan and station wagon type of vehicles, unless they are inventory for sale/rental, overlooked input VAT not yet credited and only discovered after a tax audit has commenced, purchases made by those exempted from charging output VAT.

Please click on each section to expand further:

What is the principal indirect tax?

Value Added Tax (VAT) is the principal indirect tax in the Indonesia. VAT due on the following taxable events, among others:

import and export of taxable goods,
local supply of taxable goods and/or services,
consumption of services and/or intangible goods from offshore within the Indonesian customs zone,
movement of taxable goods between the head office and a branch and between branches of the same legal entity,
movement of goods on consignment,
assets/inventories left behind in the course of a company’s dissolution,
supply of goods through a third party or a government auctioneer,
supply of goods through a finance lease arrangement,
self-use of taxable goods,
delivery of taxable goods in the context of a Shariah financing arrangement, which delivery is considered to be directly from the VATable entrepreneur to the party that needs the taxable goods,
taxable goods given away at no charge (free goods),
utilization of taxable services and intangible taxable goods from overseas.

Particular goods and services are not subject to VAT. These include:

Non-taxable goods

goods produced from mining or from drilling that are extracted directly from the source,
basic commodities vital to the general public,
food and beverages served in restaurants, including food and beverages delivered by catering businesses,
money, gold bars for the foreign exchange reserves, and commercial paper.

Non-taxable services

medical health services,
social services,
mail delivery service using stamps,
financial services,
insurance services,
religious services,
educational services,
arts and entertainment services,
non-broadcast service advertisements,
public transport services on land and on water and air transport services within the country which become an inseparable part of air transport services to abroad,
labor services,
hotel services,
services provided by the government in respect of carrying out general governmental administration,
parking provision services,
public telephone services using coins,
money transfer services using postal money orders,
catering services.

However some exemptions apply to particular goods/ situations/taxpayers.

Also on top of VAT, particular transactions/goods will also deal with import duties, sales tax on luxury goods and/or super luxury goods tax.

Is there a registration limit for the tax?

Registration as a VAT entrepreneur in Indonesia is based on delivery of taxable goods and/or services. Entrepreneurs whose gross cumulative revenue exceeds IDR 4.8 billion in a year is required to apply for a VAT able entrepreneur status. However, some exemptions apply for particular taxpayers, including those domiciles in ‘free trade zone’.

Non-established business could not register for VAT, unless they have a permanent establishment in Indonesia.

Does the same registration limit apply to non-established businesses?

There is no requirement for VAT registration for businesses that are not established in Indonesia, unless they have a permanent establishment in Indonesia that earns VAT income.

Is there any specific legislation to tax non-resident supplies of electronically supplied/digital services to private consumers resident in your country?

Yes, for supplies of electronic goods by non-tax resident as well as for services rendered by non-tax resident to an Indonesian taxpayer. Furthermore, on top of VAT, the supply of electronic goods from outside Indonesia to Indonesia custom area will also be subject to other indirect taxes, ie import duties, sales tax on luxury goods.

However, some exemptions apply.

Does a non-established business need to appoint a fiscal representative in order to register?

Not applicable.

How often do returns have to be submitted?

The due date for submission of the VAT return is at the end of the following month after the end of particular monthly tax period. Any underpayment of VAT should be settled before submission of the VAT return.

The VAT return is filed by taxpayer based on self-assessment system. Member of group of companies are taxed individually, as there are no group relief provisions available. However, for Value Added Tax Collector (ie Government Treasurer, corporate, or Government agency designated by the Minister of Finance) who doesn’t have a collected VAT transaction or has a transaction which is not subject to VAT or exempted from VAT or not qualified for VAT, do not have the obligation to submit the Vat return.

Are penalties imposed for the late submission of returns/ payment of tax?

Yes. Late payment of tax will be subject to interest penalty around 2% per month (the monthly interest rate issued by the Minister of Finance), maximum 24 months. Late reporting of a VAT return would also be subject to administrative penalty (current penalty is IDR 500,000 per return).

Additionally, a penalty of around 2% per month or part of the month for late payment of voluntarily revision on VAT payable, calculated from the due date until the date of payment.

Are any other declarations required?

General no, the VATable entrepreneur should only submit VAT return on a monthly basis, unless the taxpayer is (also) appointed as VAT Collector.

Are penalties imposed in other circumstances?

Yes. Penalties of 2% from the transaction value should be imposed for late issuance of VAT invoice or issuance of incorrect VAT invoice.

Can the VAT incurred by overseas businesses be claimed if they are not registered in Indonesia?

No.

What information must a VAT invoice show?

A VAT invoice must show at least the following:

name, address, and Taxpayer Identification Number who delivers Taxable Goods of Taxable Services,
name, address, and Taxpayer Identification Number of the buyer of Taxable Goods or recipient of Taxable Services,
type of goods or services, Sales price or replacement and price discounts,
value added tax which collected,
sales Tax on Luxury Goods which collected,
code, serial number, and date of creating the Tax Invoice and
name and signature of who are entitled to sign Tax Invoice.

However there are particular documents which its position equated with VAT invoice.

Are there any current or anticipated Standard Audit File for Tax (SAF-T) or similar electronic/digital filing requirements eg invoice listing data file/real-time VAT reporting?

Indonesia does not have the SAF-T requirement, coretax and e-Faktur desktop is the current electronic/digital devices required to issue a tax invoice and to submit the VAT return respectively.