Value added tax in Indonesia (PPN) is charged at a statutory 12%, but for goods and services that are not luxury items the tax base is 11/12 of the price, so the effective rate stays at 11%. Businesses with annual turnover above IDR 4.8 billion must register as VAT-able entrepreneurs (PKP), issue e-Faktur in Coretax and file monthly.
What is VAT (PPN) in Indonesia?
PPN is an indirect, multi-stage tax on domestic supplies of goods and services, imports, and offshore services used in Indonesia. A registered business charges output VAT, credits the input VAT it paid, and pays the difference.
The governing law is the VAT Law (Law 8 of 1983), last amended by Law 7 of 2021 (UU HPP), administered by the Directorate General of Taxes (DGT).
What is the VAT rate in Indonesia in 2026?
The statutory rate is 12%, and the effective rate is 11% for everything except luxury goods. UU HPP raised the rate from 10% to 11% on 1 April 2022 and to 12% from 1 January 2025.
To shield everyday goods and services, PMK 131 of 2024, effective 1 January 2025, applies the 12% rate to an "other value" tax base (DPP nilai lain) of 11/12 of the price for supplies that are not luxury goods: 12% × 11/12 = 11%.
Only goods subject to luxury-goods sales tax (PPnBM), such as certain motor vehicles, luxury homes, private aircraft and yachts, bear 12% on the full price. For sales of these goods to final consumers, the full rate applied from 1 February 2025 (Article 5, PMK 131/2024).
| Supply | Tax base | Rate | Effective rate |
|---|---|---|---|
| Ordinary goods and services | 11/12 of price | 12% | 11% |
| Luxury goods subject to PPnBM | Full price | 12% | 12% |
| Exports of goods and specified services | Export value | 0% | 0% |
| Offshore digital products via e-commerce (PMSE) | 11/12 of amount paid | 12% | 11% |
| Special schemes (e.g. labour supply, auctions) | Formula in PMK 11/2025 | 12% | Varies |
Special tax bases and fixed-rate schemes are consolidated in PMK 11 of 2025, in force since 4 February 2025; check your sector's formula rather than assuming 11% of the invoice.
How is VAT calculated? A worked example
A PKP sells non-luxury equipment for IDR 10,000,000 and buys inputs for IDR 6,000,000 in the same month.
| Step | Calculation | IDR |
|---|---|---|
| Output tax base | 11/12 × 10,000,000 | 9,166,667 |
| Output VAT | 12% × 9,166,667 | 1,100,000 |
| Input VAT | 12% × (11/12 × 6,000,000) | 660,000 |
| VAT payable | 1,100,000 − 660,000 | 440,000 |
A luxury good would bear IDR 1,200,000 (12% of the full price).
Who must register for VAT (PKP)?
A business supplying taxable goods or services must register as a PKP once its gross turnover in a financial year exceeds IDR 4.8 billion. Below that level it may stay unregistered or opt in voluntarily.
The threshold is set by Minister of Finance Regulation 197/PMK.03/2013, still in force; the registration procedure sits in PMK 164 of 2023. Monitor cumulative turnover monthly rather than waiting for year-end accounts.
Voluntary registration often suits a new PT PMA selling to corporate customers, who need a valid tax invoice to credit the VAT. Its company registration numbers (NIB and NPWP) must be in order first.
How do e-Faktur and Coretax work?
A PKP must issue an electronic tax invoice (e-Faktur) for every taxable supply at the time of delivery or payment, whichever comes first. Since January 2025, invoices are created and reported in the DGT's Coretax system.
Two points cause most problems: advance payments create a tax point, so VAT is due on the advance; and back-dating an invoice into another period invites rejection and audit questions.
Can you claim input VAT, and how do refunds work?
Yes. Input VAT on purchases used for taxable activity is credited in the same tax period or, if not, in a later period no more than three tax periods after the invoice period.
That window comes from Article 9(9) of the VAT Law as amended by UU HPP, and applies only if the VAT has not been expensed or capitalised. Input VAT on purchases unrelated to the taxable business, or linked to exempt supplies, cannot be credited. Excess input VAT is carried forward or, at year-end, may be claimed as a refund, which usually triggers an audit.
What is exempt or outside the scope of VAT?
Some items are outside the scope of VAT entirely; others are taxable but relieved by a facility. Input VAT linked to either cannot be credited.
- Outside the scope (Article 4A): restaurant and hotel food and drink; money, gold bullion for state reserves and securities; religious, arts and entertainment, hotel, parking, catering and general government services.
- Relieved by facility (Article 16B): staples such as rice, salt, meat, eggs, milk, fruit and vegetables; certain medical, social, financial, insurance, education, public transport and labour services.
- Zero-rated (Article 7(2)): exports of taxable goods and specified services.
What are the VAT filing and payment deadlines?
Monthly VAT must be paid, and the VAT return (SPT Masa PPN) filed, by the end of the following month; October 2026 VAT is due by 30 November 2026.
| Obligation | Deadline | Basis |
|---|---|---|
| Issue e-Faktur | At delivery or payment, whichever is earlier | VAT Law and DGT invoice rules |
| Pay monthly VAT | End of following month, before filing | PMK 81/2024 |
| File SPT Masa PPN | End of following month | PMK 81/2024 |
| Credit unclaimed input VAT | Within three subsequent periods | VAT Law Art. 9(9) |
| Late SPT Masa PPN | Penalty of IDR 500,000 per return | Tax Procedures Law Art. 7(1) |
Late payment also attracts monthly interest at a rate set by the Minister of Finance. See the DGT's Coretax deadline table.
How is VAT applied to foreign suppliers and imports?
Customs collects VAT on imported goods. Services and intangibles bought from abroad and used in Indonesia are also taxable, and the Indonesian recipient must self-assess and pay the VAT.
Since 1 July 2020, the DGT has appointed e-commerce sellers and platforms as VAT collectors (Pemungut PPN PMSE) once Indonesian sales exceed IDR 600 million a year or IDR 50 million a month, or Indonesian traffic exceeds 12,000 a year or 1,000 a month. They charge 12% on 11/12 of the amount paid (DGT digital tax page). Intra-group management fees also carry self-assessed VAT; see our overview of foreign companies in Indonesia.
How can businesses stay compliant?
Reconcile the monthly VAT return to the ledger and Coretax data, and document the VAT classification of each revenue stream; most disputes start with invoices in the wrong period or unsupported input VAT claims.
Start from the rate rules in PMK 131/2024 and the sector schemes in PMK 11/2025. JCSS Indonesia supports finance teams with tax compliance and audit readiness, including VAT health checks before a refund claim or tax audit.
Frequently asked questions
Is Indonesia's VAT rate 11% or 12% in 2026?
Both, in different senses. The statutory rate in the VAT Law is 12%. For goods and services that are not luxury goods, PMK 131/2024 applies that 12% to a tax base of 11/12 of the price, giving an effective rate of 11%. Only luxury goods subject to PPnBM pay 12% on the full price, and exports remain zero-rated.
How do you calculate VAT on a non-luxury sale?
Multiply the selling price by 11/12 to get the tax base, then apply 12%. On a price of IDR 10,000,000 the tax base is IDR 9,166,667 and the VAT is IDR 1,100,000, which equals 11% of the price. The VAT paid each month is output VAT less the input VAT that can be credited in the same period.
When does a company have to register as a PKP?
A business must register as a VAT-able entrepreneur (PKP) once its gross turnover from taxable supplies exceeds IDR 4.8 billion in a financial year, the threshold set by PMK 197/PMK.03/2013. Businesses below it can register voluntarily, which lets them issue tax invoices to corporate customers and credit the input VAT they pay on purchases and set-up costs.
What is the deadline for the monthly VAT return?
Under PMK 81/2024, VAT for a tax period must be paid, and the monthly VAT return (SPT Masa PPN) filed through Coretax, by the end of the following month, so October VAT is due by the end of November. A late monthly VAT return attracts an administrative penalty of IDR 500,000, plus interest on any tax paid late.
Which services are not subject to VAT in Indonesia?
Under Article 4A of the VAT Law, religious services, arts and entertainment, hotel accommodation, parking, catering and general government services are outside the scope of VAT. Certain medical, social, financial, insurance, education, public transport and labour services are taxable in principle but exempted through the facility in Article 16B. Input VAT linked to these supplies cannot be credited.
General information only, not legal or tax advice for your specific facts. Regulations change; confirm the current position with JCSS Indonesia before acting.