Indirect tax - Indonesia

Value Added Tax (VAT) is the principal indirect tax in the Indonesia. VAT due on the following taxable events, among others:

• import and export of taxable goods,
• local supply of taxable goods and/or services,
• consumption of services and/or intangible goods from offshore within the Indonesian customs zone,
• movement of taxable goods between the head office and a branch and between branches of the same legal entity,
• movement of goods on consignment,
• assets/inventories left behind in the course of a company’s dissolution,
• supply of goods through a third party or a government auctioneer,
• supply of goods through a finance lease arrangement,
• self-use of taxable goods,
• delivery of taxable goods in the context of a Shariah financing arrangement, which delivery is considered to  be directly from the VATable entrepreneur to the party that needs the taxable goods,
• taxable goods given away at no charge (free goods),
• utilization of taxable services and intangible taxable goods from overseas.

Particular goods and services are not subject to VAT. These include:

Non-taxable goods

• goods produced from mining or from drilling that are extracted directly from the source,
• basic commodities vital to the general public,
• food and beverages served in restaurants, including food and beverages delivered by catering businesses,
• money, gold bars for the foreign exchange reserves, and commercial paper.

Non-taxable services

• medical health services,
• social services,
• mail delivery service using stamps,
• financial services,
• insurance services,
• religious services,
• educational services,
• arts and entertainment services,
• non-broadcast service advertisements,
• public transport services on land and on water and air transport services within the country which become an inseparable part of air transport services to abroad,
• labor services,
• hotel services,
• services provided by the government in respect of carrying out general governmental administration,
• parking provision services,
• public telephone services using coins,
• money transfer services using postal money orders,
• catering services.

However some exemptions apply to particular goods/ situations/taxpayers.

Also on top of VAT, particular transactions/goods will also deal with import duties, sales tax on luxury goods and/or super luxury goods tax.

Registration as a VAT entrepreneur in Indonesia is based on delivery of taxable goods and/or services. Entrepreneurs whose gross cumulative revenue exceeds IDR 4.8 billion in a year is required  to apply for a VAT able entrepreneur status. However, some exemptions apply for particular taxpayers, including those domiciles in ‘free trade zone’.

Non-established business could not register for VAT, unless they  have a permanent establishment in Indonesia.

There is no requirement for VAT registration for businesses that  are not established in Indonesia, unless they have a permanent establishment in Indonesia that earns VAT income.

Yes, for supplies of electronic goods by non-tax resident as well as for services rendered by non-tax resident to an Indonesian taxpayer. Furthermore, on top of VAT, the supply of electronic goods from outside Indonesia to Indonesia custom area will also be subject to other indirect taxes, ie import duties, sales tax on luxury goods.

However, some exemptions apply.

Not applicable.

The due date for submission of the VAT return is at the end of the following month after the end of particular monthly tax period. Any underpayment of VAT should be settled before submission of the VAT return.

The VAT return is filed by taxpayer based on self-assessment system. Member of group of companies are taxed individually, as there are no group relief provisions available. However, for Value Added Tax Collector (ie Government Treasurer, corporate, or Government agency designated by the Minister of Finance) who doesn’t have a collected VAT transaction or has a transaction which is not subject to VAT or exempted from VAT or not qualified for VAT, do not have the obligation to submit the Vat return.

Yes. Late payment of tax will be subject to interest penalty around 2% per month (the monthly interest rate issued by the Minister of Finance), maximum 24 months. Late reporting of a VAT return would also be subject to administrative penalty (current penalty is IDR 500,000 per return).

Additionally, a penalty of around 2% per month or part of the month for late payment of voluntarily revision on VAT payable, calculated  from the due date until the date of payment.

General no, the VATable entrepreneur should only submit VAT return on a monthly basis, unless the taxpayer is (also) appointed as VAT Collector.

Yes. Penalties of 2% from the transaction value should be imposed for late issuance of VAT invoice or issuance of incorrect VAT invoice.

No.

A VAT invoice must show at least the following:

• name, address, and Taxpayer Identification Number who delivers Taxable Goods of Taxable Services,
• name, address, and Taxpayer Identification Number of the buyer of Taxable Goods or recipient of Taxable Services,
• type of goods or services, Sales price or replacement and price discounts,
• value added tax which collected,
• sales Tax on Luxury Goods which collected,
• code, serial number, and date of creating the Tax Invoice and
• name and signature of who are entitled to sign Tax Invoice.

However there are particular documents which its position equated with VAT invoice.

Indonesia does not have the SAF-T requirement, coretax and e-Faktur desktop is the current electronic/digital devices required to issue a tax invoice and to submit the VAT return respectively.