VAT rate increase and other changes to VAT rules

A law passed on 7 October 2021 (Harmonization of Tax Regulations Law) and ratified by Indonesia’s president on 27 October includes a VAT rate hike, as well as changes to the rules governing creditable input VAT and VAT exemptions:

• The standard VAT rate will increase from 10% to 11% on 1 April 2022 and then further to 12% by 1 January 2025.
• Input VAT arising from the following transactions generally will be creditable for VAT purposes:
  • Purchase or use of taxable goods and/or services;
  • Import of taxable goods; and
  • Utilization of intangible taxable goods and/or services from offshore within Indonesia.

The VAT base will be calculated based on the actual sales price, acquisition cost, import or export value or other values as stated in supporting documents.

• A temporary or permanent waiver or exemption may be granted to encourage exports and the downstream sector for national prioritized projects primarily to support the availability of certain strategic goods and services for the purpose of national development, etc.

Irwan Kusumanto
ikusumanto@bdo.co.id

Suwenny Leonardi
sleonardi@bdo.co.id

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