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
Indonesia
Author: Ivana Picajkić
Category:
Fiscal subject related
Views:
5608
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 Indonesia
Indonesia Extends Corporate Tax Filing Deadline to May 31 Amid Coretax Issues
Public
Indonesia
Author: Ljubica Blagojević
Indonesia
Author: Ljubica Blagojević
Indonesia extended the corporate income tax return filing deadline from 30 April to 31 May 2026 due to taxpayer requests and Coretax platform issues. The extension applies only to filing, while the PPh Pasal 29 payment deadline remains unchanged. The extension applies to the SPT Tahunan PPh Badan (Annual Corporate Income Tax Return). It follows requests from around 4,000 companies, tax consultants... Read more
New document was uploaded: Country overview- Indonesia
Indonesia
Author: Ljubica Blagojević
In this overview, we present the basics of Indonesia: a non-fiscal country with no mandatory POS certification, hardware requirements, and mandatory e-invoicng system, but businesses must issue receipts as proof of purchase. Read more
Subscribe to get access to the latest news, documents, webinars and educations.
Already subscriber? Login
New document was uploaded: Legal requirements- Indonesia
Indonesia
Author: Ljubica Blagojević
The document serves as a legal and operational guide for retail, VAT, and compliance in Indonesia. It covers regulatory details, VAT rules, reporting obligations, retail processes, and business registration. It highlights the absence of fiscalization, mandatory forms, penalties, and developments in e-invoicing, ensuring comprehensive compliance for retailers. Read more
Subscribe to get access to the latest news, documents, webinars and educations.
Already subscriber? Login
New document was uploaded: Legal Q&A - Indonesia
Indonesia
Author: Ljubica Blagojević
The Q&A document is an essential resource that provides clear answers to the most frequently asked questions in retail. It saves valuable time by consolidating complex information into a practical and accessible format. Prepared by our team of experienced experts, it addresses key issues such as document types, business processes, the registration process, and the applicable laws and regulations. Read more
Subscribe to get access to the latest news, documents, webinars and educations.
Already subscriber? Login
New document was uploaded: Important Characteristics of the System -Indonesia
Indonesia
Author: Ljubica Blagojević
The purpose of this document is to emphasize the most important characteristics and requirements regarding receipts, invoices, return policies, online sales, record keeping, cash registers, VAT recording, penalties and store registration in the system of Indonesia. Read more
Subscribe to get access to the latest news, documents, webinars and educations.
Already subscriber? Login
New document was uploaded: Indonesia- E-commerce
Indonesia
Author: Ljubica Blagojević
This document provides a comprehensive interpretation of the legal and administrative framework required to open and operate an online shop in Indonesia. It outlines the structured process businesses must follow to ensure compliance with trade, tax, and consumer protection laws. Read more
Subscribe to get access to the latest news, documents, webinars and educations.
Already subscriber? Login
New document was uploaded: Indonesia-Payment method
Indonesia
Author: Ljubica Blagojević
This document provides an interpretation of QRIS (Quick Response Code Indonesian Standard), which is the national standard for QR-code-based payments in Indonesia. It explains how the system was introduced by Bank Indonesia to unify a previously cluttered digital payment landscape where providers used incompatible, proprietary codes Read more
Subscribe to get access to the latest news, documents, webinars and educations.
Already subscriber? Login