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VAT Registration in Indonesia
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A major concern for entrepreneurs establishing businesses in Indonesia centers around compliance with correct work practices, particularly concerning tax and VAT obligations.
Value Added Tax (VAT) is a tax imposed on most goods and services within Indonesia. It should be noted that Indonesia levies a separate GST on the sale of luxury items, which ranges between 11% and 12%.
Additionally, the Indonesian VAT registration threshold is IDR 4.8 billion sales per annum. Paper-based applications for VAT registrations should be submitted to the regional tax office of the business. Once registered, the tax payer is granted a Tax Identification Number (TIN) of 15 digits.
Value Added Tax Registration for Corporate in Indonesia
VAT registration is mandatory for any corporate entity conducting taxable business activities in Indonesia. According to Indonesia’s Value Added Tax Law (Law No. 8 of 1983, as amended by Law No. 7 of 2021 under the Harmonized Tax Law), any company engaged in the sale of taxable goods or services and exceeding the annual revenue threshold must register as a VAT-Registered Business (PKP). Once registered, the business receives a VAT Number (Nomor Pengukuhan Pengusaha Kena Pajak – NPPKP), which must appear on all invoices and official documents.
Indonesia VAT Rate
- General VAT Rate: 12%
- Effective VAT Rate: A VAT rate of 11% applies to the majority of taxable goods and services. Using an alternative valuation method (Dasar Pengenaan Pajak/DPP Nilai Lain), the 12% rate is applied to the tax base, thus achieving this result. The DPP Nilai Lain is 11/12 the selling price. The calculations in MoF 131/2024 cannot be used by taxpayers who previously used the "other value" or "certain amount" methods under other regulations.
- Luxury Goods: A 12% VAT rate is applicable to the import and domestic delivery of luxury taxable goods which are currently subject to Luxury-goods Sales Tax. These include motor vehicles, luxurious residences with a selling price of at least IDR 30 billion, private aircraft, luxurious private cruisers, shotguns, etc. Between 1st and 31st January, 2025, domestic deliveries to end consumers will be subject to a 12% VAT rate calculated on the Other Value Tax Base (Dasar Pengenaan Pajak/DPP Nilai Lain). With the DPP Nilai Lain set at 11/12 the selling price, the effective VAT rate is 11%. A 12% rate will be applied to the standard tax base (selling price) starting 1st February, 2025.
- Goods/Services with Special Rules: Taxable goods and services already under special DPP Nilai Lain rules, or those with a specific VAT percentage outside of PMK-131 regulations, remain subject to existing regulations.
- Export: There is no VAT charged on exported goods. A zero VAT rate applies to specific exported services; though, the Minister of Finance (MoF) has restrictions on this.
- Import: Starting 1st January 2025, imported goods will be subject to a 12% VAT.
The Criteria of Digital Goods Subject to VAT in Indonesia
PMK-48/2020 provides a definition of digital goods. Under the VAT law, all digital goods are taxable. Examples include, but are not limited to, ebooks, e-magazines, and e-comics.
How Does VAT Registration Apply to Input VAT, Exports, and the Sale of Goods and Services?
VAT registration in Indonesia is mandatory for businesses that meet or exceed the annual turnover threshold (currently IDR 500 million). Once registered as a VAT-Registered Business (Pengusaha Kena Pajak – PKP), a company can legally charge VAT on taxable goods and services and claim input VAT on purchases related to its business operations.
For exports, the VAT rate is 0%, provided the exporter can substantiate the transaction with proper customs documentation.
Important Notes: An extra 2% is levied on people who do not report periodic VAT. Register your VAT now!
Document Requirements to VAT Registration in Indonesia
- Identity and contact details of Company Shareholders:
- For Indonesian Individuals, KTP and NPWP
- For Foreign Individuals, valid passport
- Identity and contact details of Company Directors and Commissioner
- For Indonesian individuals, KTP, NPWP, email and phone number
- For Foreign Individuals, valid passport, email and phone number
- Copy of Lease Agreement between company and building management
- Copy of Tax ID
- Copy of Business License
- Copy of Registration Number (NIB)
- For Indonesian Companies, copy of Article of Establishment
- For Foreign Companies/entities, copy of Article of Association in English or its translation in Bahasa Indonesia from a sworn translator
- Tax slip / Tax receipt of company (PPh pasal 4 ayat 2)
- Copy Land and Tax Building (PBB/Pajak Bumi Bangunan)
- Access to open PIC Coretax system
- Other required Documents
Register for VAT in Indonesia with LMI Consultancy
- Consult your inquiry with our professional consultant
- Submit necessary document
- Proceed with the payment
- Application process
- Receive the complete document
Other Popular Tax Management Services in Indonesia
Setup a Business in Indonesia with LMI Consultancy
Established in 2016, LMI Consultancy has been supporting countless individuals in understanding the intricacies of visas, business setup, tax & accounting, and property investment in Indonesia, providing a comprehensive and dependable service.Â
We take pride in being an ethical and innovative company that places a strong emphasis on exceptional customer service and strives to set a new standard in our industry, guaranteeing a smooth and encouraging experience for our clients.
FAQ
What Are the Rules for VAT Exemption and VAT Refund in Indonesia?
VAT-registered businesses in Indonesia must file VAT returns monthly, even if there were no taxable transactions during that period. The VAT return must be submitted and paid by the end of the following month after the transaction occurs.
To maintain VAT compliance, companies must issue valid tax invoices (faktur pajak), record both input and output VAT correctly, and report them through Indonesia’s electronic filing system (e-Faktur). Late filing or payment may result in penalties or interest charges imposed by the Directorate General of Taxes (DGT).
When to File VAT Returns and How to Stay VAT Compliant in Indonesia?
Certain transactions are exempt from VAT, including basic food items, financial services, healthcare, and education. However, businesses involved in VAT-exempt activities cannot charge VAT or claim input VAT on related purchases.
Meanwhile, VAT refunds may be requested when input VAT exceeds output VAT, often in the case of exporters or newly established companies. Refunds are processed by the tax authorities upon verification and can be credited or reimbursed, depending on the company’s status and compliance record.
Our Indonesia based company only uses the tools integrated under our global system. Is our local company exempted from VAT?
VAT exemption doesn’t apply to tools integrated into your global system if they relate to the object specified in PMK-48/2020.
What are categorised as Digital Products?
Products existing and used entirely in electronic form are classified as digital products. Email, downloads, and website logins are all ways customers can access these goods and services.
- E-books, images, movies, and videos, whether buying a copy from Shopify or using a service like Netflix.
- Downloadable and streaming music platform, whether buying an MP3 or using a service like SoundCloud or Spotify.
- Cloud-based software and as-a-Service products, such as Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS), and Infrastructure-as-a-Service (IaaS).
- Websites, site hosting services, and internet service providers.
- Online ads and affiliate marketing.
What are included in the VAT Report?
To be compliant with Indonesian tax regulations, please include this information on customer invoices:
- Your business name and address
- Your business VAT number
- Invoice date
- Invoice sequencing number
- Description of the goods or services
- Rate of VAT applied to each item
- Total amount including VAT
What Is a VAT Identification Number and How Does It Relate to Tax in Indonesia?
A VAT Identification Number (NPPKP – Nomor Pengukuhan Pengusaha Kena Pajak) is a unique code issued by the Directorate General of Taxes to businesses registered for VAT. This number confirms a company’s legal status as a VAT collector and taxpayer in Indonesia.
It must appear on all official tax invoices, contracts, and financial documents. Possessing an active VAT ID not only signifies compliance but also ensures recognition within Indonesia’s national tax system, enabling smooth cross-border transactions and credibility in business operations.
Disclaimer : Our services in LMI Consultancy provide consulting services focused on ensuring client compliance with applicable immigration and legal regulations in Indonesia. We do not provide or facilitate the production of official government documents, nor do we offer any expedited or preferential access to government services.
Disclaimer : Our services in LMI Consultancy provide consulting services focused on ensuring client compliance with applicable immigration and legal regulations in Indonesia. We do not provide or facilitate the production of official government documents, nor do we offer any expedited or preferential access to government services.
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