Indonesia VAT: A Guide for Foreign Investors (2025)

Standard VAT Rate:

• The standard Value Added Tax (VAT) rate is 11%.
• From January 1, 2025, the legal VAT rate is 12%, but a calculation is used to maintain an effective rate of 11% for most goods.  
• Luxury goods are taxed at 12% from January 1, 2025.

VAT Registration:

• Businesses conducting taxable supplies of goods or services in Indonesia are required to register for VAT (Pengusaha Kena Pajak or PKP).  
• Foreign businesses conducting taxable transactions in Indonesia may also be required to register.

VAT Returns:

• VAT returns must be filed monthly.  
• Electronic filing is mandatory.  

Input VAT Credit:

• Businesses registered for VAT can claim input VAT credit on eligible purchases.  
• The input VAT credit can offset output VAT liability.  

Imports and Exports:

• Imports into Indonesia are subject to VAT.  
• Exports from Indonesia are generally subject to 0% VAT.  

E-commerce:

• E-commerce transactions are subject to Indonesian VAT rules.  

Digital Transactions:

• Specific regulations apply to VAT on digital transactions.  

Specific Exemptions and Reductions:

• Certain goods and services may be exempt from VAT.
• Specific goods and services may be subject to reduced VAT rates.