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The Indonesian Value-Added Tax (VAT) is a tax imposed on most goods and services located in the Indonesian Customs Area. To put it another way, a consumption tax is imposed incrementally throughout the production process, concluding with the sale of the finished product. Hence, Indonesia’s VAT system influences both ultimate consumers and business entities.
With expertise in VAT and other recurring tax obligations, LMI Consultancy has supported over 100 businesses in Jakarta and Indonesia, emphasising the significance of tax compliance for both businesses and their customers.
Quick Overview VAT Tax in Indonesia
- VAT registration services: Yes
- Standard VAT rate: 11% - 12%
- Lower rates: 0%
- Who needs VAT registration: Companies delivering services or goods exceeding IDR 4.8 billion in one fiscal year
- Time frame for registration: 2 Weeks
- Attend business meetings and negotiations
- Purchase goods
- Undertake negotiations and execute contracts and memoranda of understanding unrelated to commercial ventures.
When to Report VAT
VAT returns are filed monthly. Payment and filing must be completed by the month’s end following the taxable supply.
VAT Refunds
VAT refund claims can be submitted by companies at the end of their accounting year. The DGT is responsible for deciding on VAT refunds. The refund application’s success hinges largely on a VAT audit within a year.
The application is automatically approved if no decision is made. Companies have one month to submit the necessary supporting documentation to the DGT.
Products that are not subject to VAT
The following are considered non-taxable goods:
- Mining and drilling yield various products such as natural gas, petroleum, coal, geothermal energy, and numerous ores (iron, copper, gold, silver) as well as gravel, sand, limestone, gemstones, phosphate, clay, and coal.
- Hotel and restaurant food and beverages.
- Staple foods like rice, corn, and soybeans; along with meat, eggs, milk, produce, and other ingredients such as salt and sugar are necessary.
Services not subject to tax include:
- Medical and healthcare services
- Mail services
- Social services such as funerals
- The facility offers religious services
- Insurance services
- Art and entertainment services
- Educational services
- Public transportation services
- Hotel services
- Workforce services
- Food and catering services
- Public telephone services
- Broadcasting services that are not related to advertising
- Financial services
- Labour services
- Parking provision services
- Public telephone services using coins
- Money transfer services using a postal money order
Document Requirements
- Efin number
- Invoices
- Copy of NPWP
- Access to open coretax system
Streamline Tax Reporting 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 Company Setup 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.
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 is Free Trade Zone?
Indonesia’s free trade zones include Batam, Bintan, and Karimun Islands. Free Trade Zone companies are exempt from VAT registration.
VAT does not apply to the delivery of taxable goods or to goods imported into a Free Trade Zone. The delivery of intangible taxable goods or taxable services in a Free Trade Zone are also not subjected to VAT.
When to claim VAT refunds?
You can claim back VAT at the end of the financial year.
What happens if I failed to report VAT?
Failure to submit a compliant invoice promptly may incur a 2% penalty based on your tax liability. Invoices must be maintained for at least ten years.
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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