Indonesia VAT Compliance
Value Added Tax (VAT) is a significant source of revenue for the Indonesian government. It applies to most goods and services at different rates. Generally, in Indonesia, the imposition of VAT takes two forms: the input-output mechanism and the VAT collector mechanism.
Under the input-output mechanism, the supplier charges VAT to the buyer and then pays it to the tax authorities. In the VAT collector mechanism, the seller does not collect VAT. Instead, specific entities appointed by law collect VAT and remit it directly to the tax authorities.
This page provides an overview of VAT compliance requirements in Indonesia. Be sure to bookmark the page and revisit it whenever you have a question.
| Periodic VAT Return | Due monthly, by the end of the month immediately following the taxable period 10th day of the month following the end of the tax period |
| VAT rates | 11% (standard) 12% (luxury goods and services) |
VAT rules in Indonesia
E-invoicing in Indonesia
In addition to general VAT compliance, Indonesia also has an e-invoicing mandate for almost all taxpayers.
Mandatory for VAT-registered taxpayers since 2016, Indonesia’s electronic invoicing requirements includes using a national system known as e-Faktur and largely involves issuing e-invoices for:
- Delivery of taxable goods (Barang Kena Pajak)
- Rendering of taxable services (Jasa Kena Pajak)
- Advance payment of taxable goods or services
Find out more about Indonesia E-invoicing.
Requirements to register for VAT in Indonesia
Businesses must register for VAT if their annual turnover exceeds a specified threshold:
- Threshold: Business entities with an annual turnover of IDR 4.8 billion [approx. EUR 263 472.00] or more must register for VAT. This turnover includes all supplies of taxable goods or taxable services.
- Process: Registration must be completed through the Directorate General of Taxes (DGT).
Small businesses whose annual turnover is below the specified threshold are not required to be registered for VAT. However, VAT registration is voluntary.
Penalties for non-compliance with VAT in Indonesia
Failing to comply with VAT regulations can result in administrative penalties being imposed. Criminal penalties may be imposed when businesses are late issuing tax invoices and filing VAT returns. Furthermore, penalties are also levied for failure to register for VAT on time.
- Late filing of VAT returns can incur a penalty of 2% of the VAT owed per month
- Late payments are subject to a 2% interest per month on the outstanding VAT amount
- Late registration for VAT can result in a fine of IDR 1,000,000 (approx. EUR 55.04) being imposed
- Criminal offences, including imprisonment, may be imposed for violating VAT regulations
Frequently Asked Questions
Is the VAT rate 12% in Indonesia?
The standard VAT rate in Indonesia is 11%, applying to most goods and services. However, since 1 January 2025 there has been a 12% VAT rate on luxury goods and services like private jets, cruise ships and luxurious houses.
Is Indonesia VAT zero-rated?
Generally, the VAT rate on goods and services in Indonesia is 11%. There is, however, exceptions to this – exports of taxable goods, services and intangible goods are zero-rated.
Can non-residents recover VAT in Indonesia?
Non-residents can recover VAT in Indonesia – depending on their status. Tourists can claim VAT refunds on eligible goods purchased from participating retailers under the “Tax Refund for Tourists” scheme. To qualify, they must hold a foreign passport and stay in Indonesia for no more than 60 days from their entry date.
Non-resident companies conducting business in Indonesia may be eligible to recover VAT, provided they are registered for VAT in Indonesia and comply with local tax filing requirements.
Do I need a fiscal representative in Indonesia?
Non-resident companies must appoint a fiscal representative in Indonesia to comply with local tax obligations, particularly for VAT purposes. This requirement applies to foreign businesses without a physical presence in Indonesia that engage in taxable activities within the country.
How to reclaim VAT in Indonesia?
To claim a VAT refund in Indonesia, you must purchase goods from shops displaying the “Tax Refund for Tourists” logo by presenting your passport. You need a valid tax invoice (with a payment receipt) for each transaction. The minimum VAT per transaction is IDR 50,000, and the total VAT from all receipts must be at least IDR 500,000.
Purchases must be made within one month before departure, and goods must be carried out of Indonesia as accompanied baggage within 30 days of purchase.
Non-resident companies conducting taxable activities in Indonesia may be eligible to reclaim VAT subject to fulfilling the VAT registration and filing requirements.
Solutions for VAT compliance in Indonesia
Complying with Indonesia’s VAT requirements becomes significantly burdensome on resources when you also operate in other countries. Each nation has its own VAT nuances, and requirements change over time.
That’s why it’s vital that you have a single compliance partner for wherever you do business. Sovos makes compliance simple, handling your tax needs so you can focus on your organisation.