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VAT and GST in Indonesia

Understand the system of Value Added Tax and Goods and Services Tax in Indonesia...

VAT and Goods and Services Tax (GST) are applied to most goods and services in Indonesia. Imports are subject to VAT and GST, but most exports are not.

VAT and GST taxes are called Pertambahan Pajak Nilai or PPN. PPN is a ten percent, point-of-sale tax that extends to services supplied by foreign taxpayers outside Indonesia if these services benefit Indonesia. Provisions allow for certain items to be taxed as high as 20 percent with a cap of 35 percent.

PPnBM is the Sales Tax (GST) on luxury goods. It is levied in addition to PPN. It is imposed on luxury goods which are both manufactured in and imported into Indonesia. Rates range from 10 to 50 percent, with a few items taxed as high as 75 percent.

Modern and traditional retailers

As PPN applies to the sale of agricultural products, a difference is made between modern and traditional retailers. In deference to Indonesia's traditional market economy in rural areas, cottage industries such as farmers' markets and other small businesses are exempt from sales and service taxes.

Goods not subject to VAT

  • Daily necessities basic to the public need
  • Food and beverages served in hotels, restaurants, caf├ęs, including both food and beverages consumed on and off the premises, and food and beverages delivered by a catering business
  • Money, gold and securities
  • Products of mining or drilling taken directly from source

The following services are not subject to VAT:

  • Arts and entertainment
  • Educational
  • Financial
  • Hotel
  • Insurance
  • Intra-government
  • Labour
  • Mail services requiring a stamp
  • Medical health
  • Non-commercial broadcasting
  • Parking
  • Public transport (land, water, and air)
  • Religious
  • Social

VAT refunds for tourists

A VAT rebate for luxury goods bought in Indonesia is available for tourists at international airports on the day of departure.

Eligibility is restricted to tourists who have stayed in Indonesia for no longer than two months. Foreign residents are excluded.

As this is a relatively recent programme, most participating retailers are limited to shopping malls in Jakarta and Bali.

Conditions:

  • Goods must be bought at shops which display a "VAT Refund for Tourists" logo
  • Tourists must ask for a VAT rebate (a tax invoice) which is called a faktur pajak
  • Goods eligible for discount must total at least Rp500,000 and be listed on one tax invoice. Multiple invoices can be claimed, but each must have a minimum total of Rp500,000
  • Excluded goods: food, beverages, tobacco, guns, and goods prohibited on an aircraft
  • Goods must be purchased within one month of the day of departure from Indonesia
  • Goods must be carried as accompanied baggage

Claims procedure:

  • VAT rebates can only be claimed on the date of departure from Indonesia
  • Declare goods at the Directorate of General Taxes at the airport's tax desk
  • Submit the original invoice along with the tax invoice prepared by the retailer
  • Show an airline ticket and passport

The VAT rebate can be received in cash or through an electronic bank transfer

  • For further details on VAT refunds for tourists: Click here
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