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:
4115
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
10 Essential System Updates for VAT & E-Invoicing in Qatar
Public
Other countries
Author: Ema Stamenković
Other countries
Author: Ema Stamenković
VAT preparation in Qatar must evolve due to strengthening GCC tax frameworks and digital reporting, emphasizing e-invoicing. Businesses should conduct ten system changes: review accounting software for compliance, prepare structured digital invoices, create centralized storage, update master data, review the chart of accounts, strengthen internal controls, assess system integrations, train teams,... Read more
Chile Reminder: Deadline Approaching for Document Printing Issues: March 1, 2026
Public
Other countries
Author: Ema Stamenković
Other countries
Author: Ema Stamenković
The deadline to print required documents is March 1st, 2026. Resolution No. 12 mandates companies to provide printed electronic invoices and receipts, effective May 1st, 2025, alongside digital transmission options. The deadline for anyone who is unable to print the required documents due to a lack of equipment or an unconfigured system is March 1st, 2026. The resolution No.12 that was published o... Read more
China Implements New VAT Law Regulations
Public
Other countries
Author: Ljubica Blagojević
Other countries
Author: Ljubica Blagojević
China’s VAT implementation regulations, effective 1 January 2026, replace the provisional VAT rules and introduce tighter VAT scope and input VAT credit rules, including annual reconciliation for long-term assets over RMB 5 million (approx. €605,404). While VAT rates remain unchanged, compliance complexity increases, and businesses should reassess VAT positions and controls ahead of implementation... Read more
Colombia Approves Temporary 2026 Tax Hikes on Alcohol, Tobacco, and Imports
Public
Other countries
Author: Ema Stamenković
Other countries
Author: Ema Stamenković
The Colombian Government issued Decree 1474 due to an Economic Emergency, introducing temporary tax measures for 2026 to address a fiscal gap. VAT and excise tax increases apply to liquor, cigarettes, and certain vehicles. Equity tax threshold lowered and progressive rates increased. A special 1% tax on hydrocarbons/coal is extended, and a 19% normalization tax on undeclared assets initiates. Pena... Read more
UAE VAT Rates Overview
Public
Other countries
Author: Ema Stamenković
Other countries
Author: Ema Stamenković
UAE VAT is crucial for businesses, with a standard rate of 5% on most goods/services. Zero-rated supplies allow input VAT recovery, while exempt supplies incur hidden costs. Compliance and documentation are essential for strategic business insights. Value-Added Tax (VAT) is essential for businesses in the UAE. Understanding rates and compliance impacts your bottom line. Standard Rate: 5% Applies... Read more
Saudi Arabia Extends Tax Penalty Waiver to June 2026
Public
Other countries
Author: Ema Stamenković
Other countries
Author: Ema Stamenković
On 1 January 2025, Saudi Arabia extended ZATCA’s initiative to cancel penalties for taxpayers until June 2026. Eligible taxpayers must submit returns and pay dues, excluding evasion penalties and those already paid. On 1 January 2025, Saudi Arabia’s Minister of Finance approved a six-month extension of ZATCA’s Initiative to Cancel Fines and Exempt Taxpayers from Financial Penalties. Th... Read more
New Zealand E-Invoicing Overview
Public
Other countries
Author: Ema Stamenković
Other countries
Author: Ema Stamenković
New Zealand is rolling out e-invoicing in phases, emphasizing government procurement and using the Peppol framework. While adoption is voluntary for businesses, large suppliers will be mandated to send e-invoices by January 1, 2027. E-invoices must follow the Peppol BIS Billing 3.0 specification and include essential GST-related information. The focus is solely on domestic transactions, with no im... Read more