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Indonesia– indirect tax guide

Indonesia– indirect tax guide

Explore the requirements and rules that apply to indirect taxes in Indonesia.

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General

Type of indirect tax:

VAT

Standard rate:

10%.

What supplies are liable to the standard rate?

The delivery of taxable goods by an entity in Indonesia; the importation of taxable goods; the rendering of taxable services in Indonesia; utilization in Indonesia of intangible taxable goods from outside Indonesia; utilization of offshore taxable services in Indonesia; the disposal of fixed assets and export services by an entity in Indonesia, except for certain categories of exported services as set out further below.

Are there any reduced rates, zero- rates or exemptions and if so, what do they apply to?

Zero rated: exports of goods and exports of certain services, including:

  • toll manufacturing, repair and maintenance on movable goods outside the Customs Area, freight forwarding related to exported goods, construction consulting related to building and building plans outside the Customs Area, technology and information, and research and development services
  • transportation rental services in the form of rental of aircraft and/or vessel for international aviation or shipping activities
  • business and management consulting services, legal consulting services, architecture and interior design, consulting services, human resources consulting services, engineering consulting services (engineering services), marketing consulting services (marketing services), accounting or bookkeeping services, financial statement audit services, and tax services
  • trade services in the form of services to find goods sellers within the Customs Area for export
  • interconnection, satellite operation and/or data communication services

Exempt: deliveries and/or the import of taxable goods designated as strategic goods by the government; and certain goods or other services in order to support the achievement of certain national objectives.

VAT not collected: deliveries of goods to a bonded zone; and deliveries of goods and services to a free trade zone.

VAT free (not subject to VAT): certain goods and services that are not subject to VAT. For example, goods that are taken directly from their source (e.g., crude oil, natural gas, coal), financial services (e.g., banking, insurance and finance leasing), etc. Hotels, restaurants and entertainment are not subject to VAT — instead, they are subject to local taxes referred to as PB1, which is not a creditable tax.

VAT/GST registration

Who is required to register and what is the threshold?

Indonesian taxpayers (companies and individuals) with annual turnover of more than 4.8 billion Indonesian rupiah (IDR).

Is voluntary registration possible?

Yes.

Is voluntary registration available for an overseas company or a fiscal representative?

No.

VAT/GST compliance

What is the typical frequency of returns?

Monthly.

VAT/GST recovery

Are there any items that a registered business cannot recover VAT on?

Yes, those items include:

  • acquisition of goods and services before the entrepreneur is registered/deemed as a taxable entrepreneur
  • acquisition of goods and services unrelated to business activities or related to non-VATable business activities
  • acquisition and maintenance of certain motor vehicles, except commodities or rentals
  • acquisition of intangible goods and services from outside Indonesia with invalid tax invoices
  • goods or services where the input tax is collected by issuing a tax assessment
  • acquisition of taxable goods or services where the input tax is not reported in monthly VAT returns and is discovered during an audit
  • acquisition of taxable goods, other than capital items, before a taxable entrepreneur starts production
  • input VAT more than 3 months from the end of the period in which it is incurred.

Can an overseas company recover VAT if it is not registered?

No.

How long does it typically take to obtain a VAT refund following a return filing?

VAT refunds can only be claimed at the end of the fiscal year (normally in the December VAT return), except for certain types of businesses. VAT refund claims usually result in a tax audit being opened and can take many months, up to 1 year, before any refund payment is made.

Invoices

Are there specific requirements for the content of invoices to be considered valid for VAT purposes?

Yes, a VAT invoice must show a code and serial number; details of the supplier; details of the purchaser; details of the goods and services; price; discount (if any); advanced payments (if any); the tax collection basis; the amount of VAT payable; sales tax on luxury goods (if applicable); date; and name and signature.

Special indirect tax rules

Does a reverse charge or indirect tax withholding mechanism apply?

Yes, reverse charge.

Rulings

Is it possible to apply for formal or informal advance rulings from the tax authority?

Yes, it is possible to apply for a formal advance ruling from the tax authority. However, there is no specific response timeline for a ruling request.

Other indirect taxes

Are there any other indirect taxes that apply in the jurisdiction?

Other indirect taxes include the following:

  • local tax (PB1) on hotel, restaurant and entertainment services
  • sales tax on luxury goods
  • stamp duty
  • excise and customs duty.

Contacts

Bambang Budiman
KPMG in Indonesia
T: +62 2 1570 4888
E: bambang.budiman@kpmg.co.id

Disclaimer

All information within this guide is provided by KPMG professionals in Indonesia and based on information available as of September 2019.

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