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. If you are seeking help for VAT registration in Indonesia, please get in touch with our company formation agents. Also, note that the services of our immigration lawyers in Indonesia are at your disposal if you are planning a relocation.
Quick Facts | |
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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
In Indonesia, VAT registration is vital for foreign businesses to follow tax laws and be part of the VAT system. Here is a general guide:
Our lawyers also take care of filing VAT returns, either monthly or quarterly, depending on your turnover. They also ensure the timely transfer of collected VAT to the authorities.
To register a company for VAT in Indonesia, follow these general steps:
Be prepared for tax audits by the Indonesian tax authorities to ensure ongoing compliance with VAT regulations. It’s essential to stay informed about any updates or changes in VAT regulations in Indonesia, as tax laws and thresholds can evolve. Consulting with our company formation specialists in Indonesia experienced in Indonesian tax matters is highly recommended to navigate the process smoothly and remain in compliance with tax regulations. Moreover, if you are planning to open a company in Indonesia, you are welcome to get help from our agents.
Firstly, joint responsibility for VAT payment in Indonesia involves two scenarios. It is not enforced if the VAT can be collected from the seller or if the buyer can provide proof of VAT payment to the seller. In such cases, no joint responsibility is imposed. However, joint responsibility may be enforced if the VAT cannot be collected from the seller and the buyer cannot demonstrate VAT payment to the seller. This responsibility is established through the issuance of an Underpaid Tax Assessment Letter (SKPKB) or an Additional Underpaid Tax Assessment Letter (Surat Ketetapan Pajak Kurang Bayar Tambahan), or via self-assessment using a tax payment slip (Surat Setoran Pajak).
Secondly, the calculation of VAT and luxury goods sales tax (LST) in cases where these taxes are already included in the selling or delivery price has been updated. PP-1 introduced formulae for this calculation. PP-44, implemented from 1 April 2022, adjusts these formulae to accommodate the new VAT rate of 11%.
Lastly, in the past, when dealing with transactions in a currency other than the Indonesian Rupiah (IDR), the conversion into IDR was based on the foreign exchange rate set by the Ministry of Finance (MoF) decision letter (KMK rate) on the VAT invoice’s preparation date. However, under the updated guidelines in PP-44, such transactions must now be converted into IDR using the KMK rate in effect on the due date for issuing the VAT invoice or any equivalent document.
You can get additional information about these changes in the VAT law from our company incorporation consultants in Indonesia. Besides this, if you have additional questions about immigration to Indonesia, the services of our lawyers are at your disposal.
Karimun Island, Bintan Island, and Batam Island are designated as free trade zones. Within these zones, businesses are not obligated to undergo VAT registration in Indonesia. Furthermore, the supply of taxable goods and imports of taxable goods within the free trade zones are VAT-exempt. Additionally, the supply of intangible goods within these zones is also exempt from VAT. If you are interested in learning more about the free trade zones in Indonesia, you can consult our consultants. They can also help you set up a company in Indonesia.
Indonesian companies are required to supply the following VAT-exempt goods and services:
Other services are exempt from VAT in 2024. Our team of company incorporation experts in Indonesia 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.
To levy the GST, Indonesian companies must register for VAT and report the liabilities resulting from the sale of taxable goods and services every month. 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 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 other questions, such as those concerning Indonesian immigration, please do not hesitate to consult our team of experts. We specialize in all matters concerning residency, permanent relocation, or permanent residency. Our team can answer specific questions, based on the applicant’s purpose of staying in the country (business, employment, family reunification, etc.).
Companies or sole traders in Indonesia must levy the value-added tax on the following:
The standard VAT rate in Indonesia is 11%, however, there are also certain services and goods which are exempt from the VAT or are applied at lower rates. Investors who are interested in immigration to Indonesia to start a business should be aware of these rates.
Apart from the GST on most types of goods and services, a luxury goods sales tax applies to items that are classified as such. This special tax has a rate varying between 10% to 200%, depending on the type of luxury goods. At the same time, the exports of luxury goods are not subject to this luxury goods tax.
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 2024, include the following:
Besides VAT, our accountants in Indonesia are here to assist you if you are seeking help with your company’s accounting.
If you would like to open a company or invest in Indonesia in 2024, you should know that the country’s economy has registered growth, and the GDP per capita reached IDR75.0 million (approximately US$4,919.7) in 2023. A business sector that has shown growth both on a quarterly and on a yearly basis is the transportation and storage sector, with a 10.33% increase on a year-on-year basis.
Our lawyers in Indonesia can give you details on the tax rates applicable to individuals. If you have any further questions about VAT registration in Indonesia, please contact us.