On December 31, 2024, the Indonesian Minister of Finance issued Regulation No. 131 of 2024 (PMK-131), which establishes a 12% value-added tax (VAT) effective January 1, 2025, applying to both luxury and non-luxury goods. The regulation outlines the calculation of the tax base, including a transition period allowing for an alternative tax base for deliveries to end consumers until January 31, 2025. Additionally, technical guidance on VAT invoice preparation was released on January 3, 2025, detailing compliance requirements and exemptions for certain services.
Reminder: Indonesia Implemented New VAT Regulations with 12% Rate Effective January 1, 2025
Public
Other countries
Author: Ivana Picajkić
Category:
Fiscal subject related
Views:
338
Content accuracy validation date:
23.01.2025
Content accuracy validation time:
11:56h
On 31 December 2024, the Minister of Finance issued Regulation No. 131 of 2024 (PMK-131) which went into effect on 1 January 2025, and outlines how VAT should be treated in Indonesia. The Director General of Taxation also issued technical guidance on VAT invoice preparation, which went into effect on 3 January 2025.
The Regulation details how VAT will be applied to luxury and non-luxury goods, the calculation of the tax base, and the transition period for implementing these changes.
The main elements of the Regulation are as following:
- VAT Rate and Tax Base:
- The VAT rate is set at 12% for 2025,
- For luxury goods, VAT is calculated based on the full selling price or import value,
- For non-luxury goods, the tax base will use an "Other Value," which is defined as 11/12 of the selling price or import value.
- Transition Period:
- From January 1 to January 31, 2025, a transition period allows for the use of the Other Value tax base for deliveries made to end customers,
- After this period, from February 1, 2025, the full selling price will be used as the tax base for all sales.
- Exemptions:
- Certain services are exempt from VAT, including educational services from accredited institutions and specific financial services.
- B2B Transactions:
- A reverse charge mechanism applies where VAT-registered businesses in the Philippines are responsible for withholding and reporting VAT on services received from foreign providers.
- VAT Invoice Requirements:
- Every transaction involving a VAT-registered non-resident DSP must include a digital sales invoice with specific details such as transaction date, consumer identification, and total amount including VAT.
- Refund Procedures:
- If excess VAT is collected due to incorrect tax base application, the taxed party can request a refund from the seller, who must amend their tax invoice accordingly.
- Administrative Updates:
- Businesses must update their administrative processes to reflect these changes in invoicing and compliance with new regulations.
While the effective VAT impact for non-luxury goods remains at 11%, businesses must adapt their invoicing practices to comply with PMK-131 and its associated technical guidance issued by the Director General of Taxation.
Other news from Other countries
Understanding Digital Reporting and e-Invoicing in the USA
Public
Other countries
Author: Ivana Picajkić
Other countries
Author: Ivana Picajkić
E-invoicing allows businesses to exchange invoice data electronically, improving tax compliance and efficiency, though it is not mandatory in the U.S. The government is gradually promoting its adoption, with initiatives like the Business Payments Coalition and the Federal Reserve testing a B2B exchange network. Digital reporting (e-reporting) involves submitting tax-related data electronically to... Read more
Colombia Updates e-Invoicing Rules for Purchasers and Public Utilities
Public
Other countries
Author: Ivana Picajkić
Other countries
Author: Ivana Picajkić
On February 13, 2025, Colombia’s DIAN proposed updates to e-invoicing rules, limiting the purchaser information required for invoices and allowing automated ID-based data entry for billing. The changes also restrict public utility invoices to service-related charges unless the user consents, with a 48-hour window for issuing invoices in case of technical issues. On February 13, 2025, Colombia&rsqu... Read more
Understanding Finland’s VAT System
Public
Other countries
Author: Ivana Picajkić
Other countries
Author: Ivana Picajkić
Finland’s VAT system (Arvonlisävero - ALV) follows EU regulations, with a standard rate of 25.5% and reduced rates of 14% and 10% for specific goods and services. Businesses must register if annual turnover exceeds €20,000, file VAT returns monthly, quarterly, or annually based on revenue, and comply with strict invoicing rules, while special VAT mechanisms such as reverse charge, import VAT defer... Read more
Estonia Approves Optional Mandatory E-Invoicing from July 2025
Public
Other countries
Author: Ema Stamenković
Other countries
Author: Ema Stamenković
On 18 September 2024, Estonia’s Parliament approved changes to the Accounting Act to introduce optional mandatory e-invoicing from 1 July 2025, delayed from January. This bill simplifies requirements for e-invoices, adopting the EU’s EN 16931 standard to encourage digital invoicing across both public and private sectors. It allows B2B customers to insist on e-invoices from their suppliers, streaml... Read more
Latvia: New B2B e-Invoicing and e-Reporting Requirements Effective January 1, 2026
Public
Other countries
Author: Ema Stamenković
Other countries
Author: Ema Stamenković
The "Grāmatvedības likums" (Accounting Law) in Latvia mandates structured electronic invoices for all transactions, except budget institutions. The law also allows businesses to convert paper accounting documents into electronic format for storage, with the Cabinet of Ministers defining the procedure for data submission. Tax declarations can be used as supporting documents for calculated tax, and... Read more
Vietnam Introduces Draft Decree on E-Commerce Customs Procedures
Public
Other countries
Author: Ema Stamenković
Other countries
Author: Ema Stamenković
The Ministry of Finance (MOF) has recommenced work on a decree outlining customs procedures for e-commerce goods, introducing a new draft ("Draft Decree") to address key aspects of cross-border e-commerce. The draft covers areas such as customs declarants, risk management, data handling, import permit exemptions, import duties, customs valuation, and procedural requirements. Regarding what the reg... Read more
The Netherlands Explores Real-Time VAT Calculations and Split Payments to Combat Tax Fraud
Public
Other countries
Author: Ivana Picajkić
Other countries
Author: Ivana Picajkić
The Dutch tax authorities are considering real-time VAT calculations and split payments to combat VAT fraud, especially in the B2C sector. This system would ensure automatic VAT collection at the point of sale, replacing traditional tax returns. While similar models exist in Poland, Italy, and South America, challenges such as payment provider readiness and non-resident seller compliance must be a... Read more