VAT Registration - Lets Move Indonesia

One of the business owner’s biggest concerns when they set up a company in Indonesia is ensuring they adhere to the correct working practices and that means paying the correct taxes and VAT.

Many new business owners ask whether they need to register for VAT and this depends on a few different factors; but before we get there, let’s clarify what it is and who it is relevant to.

Value-Added Tax (VAT) is a tax imposed on most goods and services within Indonesia. The standard taxable rate is 11%; however, some goods or services are charged at different rates ranging from 5 – 15% in accordance with Indonesian Regulations.

It should be noted that Indonesia levies a separate GST on the sale of luxury items, which ranges between 10% and 50%.

In general, your business is required a VAT registration number when it reaches an annual revenue of 4.8 billion IDR (Approx. 360,000 USD).

Must-Know Services Before Registering for VAT Number in Indonesia

As well as different VAT identification number rates, some business services are subject to activate 0% VAT, which as of 1st April 2019 includes:

Services connected to movable goods, utilised outside of the Customs Area that comprise:

Toll manufacturing services

Repair and maintenance services

Freight forwarding services for export-oriented goods.

Services connected to the return of immovable goods located outside of the Customs Area in the form of consultation services for construction.

Other services where the output is utilised outside of the Customs Area, and utilisation is based on a request from an overseas business recipient. These services comprise:

Information and technology services

Inter-connection, satellites, and/or data connectivity services

Research and development (R&D) services

The rental of aircraft and/or ships for an international flight for shipping activities

Trading services that help find domestic sellers to procure goods for export turnover.

Certain consultation services, accounting services, financial audit services, and tax services, among others.

Additional notes:

If your company is considered as Pengusaha Kena Pajak (PKP) you must report your VAT invoice related to taxable turnover business activity monthly.

Companies with several branches must threshold register each branch with the Kantor Pelayan Pajal (KPP).

Required Documents

To register for VAT in Indonesia (PPN), businesses must submit several documents, including:

Application Form: A filled-in registration form for VAT application.

Company Registration Documents: The company’s establishment deed and other relevant corporate documents.

Director’s Documents: Documents for the company’s director, such as their identification and tax ID

The Steps Involved During The Indonesia VAT Registration Number Process are:

Submit the required VAT Documents to the Tax Office

Collect the VAT Certificate

Submit for VAT account

VAT account (username and password) will be sent through the email

Want to know more about income taxes in Indonesia? Then check out our useful guide!

Tax in Indonesia – Your Most Common Questions Answered!

For further information or professional assistance with your tax reporting or other related matters, we invite you to contact the Lets Move Indonesia team.

Based in Jakarta, our experienced consultants support individuals, investors, and any company in Indonesia in managing their tax obligations in accordance with prevailing regulations. With in-depth knowledge of local tax administrations, we assist with monthly and annual tax reporting, individual tax filings, payroll management, and accountancy requirements.

Our objective is to streamline tax processes, reduce administrative burden, and ensure that your tax affairs are handled accurately and efficiently, allowing you to focus on your core business activities with confidence.