VAT Registration and E-Faktur Compliance in Indonesia: Key Challenges for Foreign Investors

• VAT compliance in Indonesia is complex for foreign investors due to system integration, documentation, and ongoing administrative requirements.
• VAT registration is mandatory once annual turnover exceeds IDR 4.8 billion (US$300,000), but many foreign companies must register earlier due to market demands.
• VAT registration changes business operations, requiring adjustments in pricing, invoicing, and cash flow management, and increases the need for alignment between contracts, invoices, and accounting.
• The e-Faktur system is central to VAT compliance; invoices not processed through it are non-compliant.
• Common challenges for foreign investors include execution errors, system incompatibility, and coordination gaps between local and regional finance teams.

Source: aseanbriefing.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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