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VAT Rates in Indonesia

Quick overview

Standard Rate Reduced Rate Other Rates
10% N/A 0%, Exempt

The local name for VAT in Indonesia is Pajak Pertambahan Nilai (PPN).

There is basically 1 VAT rate in Indonesia, a Standard VAT rate of 10%

Recent developments

The draft 2022 Budget includes an increasing the standard VAT rate from 10% to 12%, along with the introduction of varied rates of 5% to 25% for certain goods and services, as well as the removal of most VAT exemptions. The VAT rate will increase to 11% on April 1, 2022 and to 12% in 2025.

For more information about (recent) rate change developments in Indonesia, please click HERE.

Standard rate: 10%

This rate applies for all transactions that take place in Indonesia, unless an exception applies (such as a reduced rate, the zero rate or an exemption, or a reason to treat the transaction as outside scope of VAT).

Zero rate (0%)

Examples of goods and services taxable at 0%, with the right to deduct VAT

Exported taxable services subject to zero-rated VAT
— Activities that are inherently related to the exported movable goods, which will be used outside Indonesian Customs Area (ICA). Under this type of activities are:
— Toll manufacturing services
— Repair and maintenance services
— Freight forwarding service on an export transaction
— Activities that are inherently related to the immovable properties that are located outside ICA. Under this category are construction consulting services, which cover feasibility study, planning and construction designing of a building or building master plan that is located outside ICA
— Activities other than the above for which the result is delivered to be utilized outside ICA, by way directly or indirectly delivered, among others, by post and electronic channel; or the provision of rights to be used/accessed outside of the ICA, based on the request from the recipient of taxable services. Under this type of services are:
— Technology and information services
— Research and development services
— Transportation rental services in the form of rental of aircraft and/or vessel for international aviation or shipping activity
— 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
— Trading services in the form of procurement to find suppliers within the ICA for export transaction
— Interconnection, satellite providers and/or communication/data connectivity services

Examples of exempt supplies of “strategic goods”

The term “exempt supplies” refers to supplies of goods and services that are not liable to VAT and that do not qualify for input tax deduction.

The VAT exemption also applies to supplies or importation of goods that fall under the category of “strategic goods.”

  • Capital goods in the form of plant machinery and equipment, in either built-up or knock-down condition, which is used directly in the process of producing taxable goods by the taxable entrepreneur who produces the taxable goods, including those whose acquisitions are carried out by parties doing integrated construction work, excluding spare parts
  • Livestock, poultry, fish feed and raw materials for the manufacture of livestock, poultry and fish feed
  • Agricultural produce (goods produced from business activities in the sectors of agriculture, plantations, forestry, livestock farming, hunting or trapping, or breeding fisheries, whether from fishing or cultivation)
  • Seeds or sperm of agricultural, plantation, forestry, livestock, breeding or fishery products
  • Raw materials of silver crafts in the form of silver granules and/or in the form of silver bars
  • Housing units of Rumah Susun Sederhana Milik, whose acquisition is financed through subsidized home ownership credit/financing that meets the provisions of certain requirements
  • Electricity, except for residences with power in excess of 6,600 watts
  • Liquified natural gas

Examples of exempt supplies of goods and services

  • Official textbooks
  • Religious books
  • Vaccines
  • Certain ships, aircraft and trains
  • Some real estate transactions
  • Services supplied to local shipping companies
  • Services supplied by the national army

The Free Trade Zone (FTZ) regimes provide a VAT exemption for the delivery of goods or services within the FTZ and the non-collection of VAT for the delivery of taxable goods or services to the FTZ. The areas that have been confirmed as FTZs are Batam Island, Sabang Island, and Bintan and Karimun Islands.

Nontaxable goods include mining or drilling products extracted from source (exclude coal mining result), basic commodities for public necessities (rice, corn, sago, soybean, iodized and non-iodized salt, fresh meat, eggs, milk, fruits and vegetables), food and beverages served in hotels, restaurants, food courts and such other places (dine-in or take-away, including catering), money, gold bars and valuable documents.

Nontaxable services include the following:

  • Medical health services
  • Social services (orphanages and funerals)
  • Mail services with stamps (postal services)
  • Financial services including fund raising and placement
  • Financing services, including shariah-based financing (financial lease, factoring, credit card and consumer financing)
  • Underwriting and mortgage
  • Insurance services
  • Religious services
  • Educational services
  • Commercial art and entertainment services that are subject to regional entertainment tax
  • Broadcasting services for non-advertising (radio or television broadcasting performed by a government institution or private agency that does not constitute advertising and that is not financed by a sponsor for commercial purposes)
  • Public transport on land or water
  • Domestic air transport as an integrated part of international air services
  • Manpower services
  • Hotel services
  • Public services provided by the government
  • Parking space services
  • Money order services
  • Catering services

A global VAT/GST rate overview can be found here (note this is a work in progress).

This post was last updated on October 7, 2021.

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