The taxation system in Indonesia is made up of several levies which apply to both companies and individuals. If companies are levied the corporate tax and individuals the personal income tax, which are direct taxes, there are also indirect levies among which the value added tax (VAT) or the goods and services tax (GST) is the most important one. The VAT applies to certain goods and services sold in Indonesia.
In 2023, the VAT rates remain unchanged, and have two values, the standard one and the reduced rate, as can be seen below.
Our Indonesia company formation consultants can offer more information on how the VAT is applied.
| Quick Facts | |
|---|---|
| VAT registration services | Yes |
|
Standard VAT rate |
11% |
|
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 |
| VAT for real estate transactions |
All or partly exempt on the sale of certain residential property |
| Exemptions available |
Companies in free trade zones are not subject to VAT registration |
| Period for filing |
Monthly VAT return filing |
| VAT returns support | Yes, upon request from our team |
| VAT refund | It can be claimed at the end of the fiscal year |
| Local tax agent required |
Recommended |
| Who collects the VAT |
Directorate General of Taxes |
| Documents for VAT registration |
– filled in application form; – the company’s registration documents; – documents for the company’s director |
| VAT number format |
15 digits |
| VAT de-registration situations |
Cesation of activities |
Table of Contents
Goods and services taxable under the GST in Indonesia
Companies or sole traders in Indonesia must levy the value added tax on the following:
– the delivery of goods;
– the delivery of services;
– the import of certain taxable goods;
– the export of certain taxable goods or services;
– the consumption and use of goods, respectively services from abroad.
The standard VAT rate in Indonesia is 10%, however, there are also certain services and goods which are exempt from the VAT or are applied at lower rates. Also, the VAT can be increased or decreased to 15%, respectively to 5% by the government. Investors who are interested in immigration to Indonesia for the purpose of starting a business should be aware of these rates.
It should be noted that Indonesia levies a separate GST on the sale of luxury items which ranges between 10% and 50%.
Our company registration agents in Indonesia can offer more information on the VAT rates.
Our Indonesian lawyers can help answer other questions concerning tax matters and tax law. With our help, you will fully understand the taxation regime that applies in your case, either as a foreign national deriving income from the country, or as a business that offers local and international services. You can reach out to us if you have any questions about our legal services.
Other taxes on corporations in Indonesia, relevant to those interested in company formation in 2023, include the following:
- The corporate income tax of 22%;
- The branch remittance tax, with a value of 20%, can be reduced in some cases;
- Social security contributions with a value of 0.24%-1.74% for work accident protection, 0.3% for death insurance, and 2% for the pension plan (subject to a cap), along with others.
Our immigration lawyers in Indonesia can give you details on the tax rates applicable to individuals.
Goods and services exempt from the VAT in Indonesia
Indonesian companies are required to supply the following VAT-exempt goods and services:
– mineral and natural resources;
– commodities, such as basic food products;
– food and drinks supplied by hotels and restaurants;
– money and securities;
– educational services;
– financial services;
– insurance services;
– healthcare services;
– touristic services.
There are also other services that are exempt from the VAT in 2023. Our team can give you complete information about these exceptions and, upon request, provide you with a comprehensive and personalized analysis to determine the rules (and possible exemptions) that may apply in your case.
In order to levy the GST, Indonesian companies must register for VAT and report the liabilities resulting from the sale of taxable goods and services on a monthly basis. Also, at the end of every financial year, companies are entitled to file for VAT refunds with the tax authorities in Indonesia.
VAT registration, filing, and payment are part of our tax and accounting package. Companies can rely on the services provided by our accountants in Indonesia for matters concerning bookkeeping, preparing and filing the annual financial statements, payroll and other taxes, monthly, quarterly, or annual financial reports, general ledger review and more. You can reach out to us for complete information about our services.
For full information on how to value added tax is applied in Indonesia in 2023, please contact us. You can also rely on our company formation advisors if you want to start a business in Indonesia.
For other questions, such as those concerning Indonesian immigration, please do not hesitate to contact our team of experts. We specialize in all matters concerning residency, permanent relocation, or permanent residency. Our team is able to answer specific questions, based on the applicant’s purpose of stay in the country (business, employment, family reunification, etc.).