Indonesia – Lovat Compliance

VAT Standard Rates

The standard VAT rate for goods in Indonesia is 11%. This rate applies to most goods and services.

VAT Zero Rate

Certain goods and services in Indonesia are subject to a 0% VAT rate. These typically include:

Export of goods;
International freight forwarding services;
Services related to goods that are intended for export and are processed in a bonded zone or special economic zone:
Sales of taxable goods to Free Trade Zones (FTZ).

Threshold

Businesses with an annual turnover of IDR 4.8 billion (approximately USD 320,000) or more are required to register for VAT. Businesses below this threshold can voluntarily register if they wish to claim input tax credits.

Registration Procedure

To register as a VAT payer in Indonesia, businesses must apply to the Tax Office using the online registration system. It is necessary to provide incorporation documents, Taxpayer Identification Number (NPWP), proof of business premises and a completed registration form.

Upon approval, the Tax Office will issue a VAT registration number.

Registration must be completed within a month after reaching the threshold level.

Tax Representative

Foreign businesses that do not have a physical presence in Indonesia but conduct taxable transactions within the country are required to appoint a tax representative. The tax representative must be an Indonesian resident and will handle VAT compliance on behalf of the foreign entity.

Keeping Records

Businesses must maintain accurate and complete records of all transactions, these records must be kept for a minimum of 10 years and should be readily available for inspection by the tax authorities.

Filing VAT Return and Payment Date

VAT returns in Indonesia must be filed monthly. The deadline for filing and payment is the end of the following month after the tax period. For example, the VAT return for January must be filed and paid by the last day of February.

Penalties

Penalties for non-compliance with VAT regulations in Indonesia include:

Late registration: A fine of IDR 1,000,000;
Late filing of VAT returns: A fine of 2% of the VAT payable;
Late payment of VAT: Interest at 2% per month on the unpaid amount;
Failure to issue tax invoices: A fine of 1% of the transaction value.

VAT Standard rate

VAT standard rate in Indonesia in 2024 is 11%, which applies to digital goods sales provided by overseas businesses to Indonesian customers with some exemptions like supplies of services to the Free Trade Zone area (Batam Island, Sabang Island, Bintan and Karimun Islands). Export in Indonesia is zero-rated.

VAT registration threshold

Businesses have to register for VAT in Indonesia if their revenue exceeded IDR 600,000,000 (approx. EUR 35,000) in the previous 12 months, or IDR 50,000,000 (approx. EUR 3,000) per month.

Businesses have to register if they are:

online relailers of digital goods;
non-resident online marketplace oparators;
indonesian online marketplace oparators.

that provide B2B and B2C services to the customers from Indonesia.

Voluntary registration is allowed.

Pieces of evidence

VAT is payable at the place of supply. The territory of Indonesia is deemed to be the single place of supply of services. The time of supply is the earliest event among the following: at the moment the service occurs, at the moment of billing, or at the moment the price is paid (in whole or in part). A service customer in Indonesia is a natural or legal person, which is defined by location in Indonesia according to the following criteria:

Billing address;
Postal address for their account with the seller;
Credit or debit cards;
IP address;
Telephone code.

E-services list

Books, magazines, newspapers;
Apps, games, computer software;
Movies, music;
Subscriptions on digital services;
Design, marketing, advertising services.

Registration procedure

Businesses must submit the application using the hard copy form prescribed by the DGT to the Indonesian tax office. Also, the incorporation document and the owner identification documents are required. Following approval of the VAT application, an electronic certificate must be obtained and the company’s VAT account activated within 3 months.

Keeping records

The period of keeping records in Indonesia must be at least ten years.

VAT returns filing and payment date

The VAT returns in Indonesia are submitted on monthly or quarterly basis to the Indonesian Directorate General of Taxes (DGT). VAT payments should be done in Indonesian rupiah on monthly basis.