VAT 12%

Indonesia's VAT rate is 12%, effective from 1 January 2025 under Article 7(1)(a) of the Tax Harmonization Law (UU HPP No. 7/2021). The previous rate was 11% (from 1 April 2022) and 10% before the UU HPP.

DPP is the tax base used to calculate VAT payable. For standard taxable goods and services, the DPP is generally the selling price or consideration before VAT. VAT payable = DPP x 12%. Legal basis: Article 8A of the VAT Law.

If the known price already includes VAT (gross price): DPP = Gross Price x 100/112. VAT = Gross Price - DPP, or DPP x 12%. Example: price is Rp 112,000 inclusive of VAT. DPP = Rp 112,000 x 100/112 = Rp 100,000. VAT = Rp 12,000.

VAT-exempt items include basic foodstuffs (rice, corn, sago, soybeans, salt, meat, eggs, milk, fruits, vegetables), education services, health services, financial services, insurance services, and social services. Legal basis: Article 4A of the VAT Law and Government Regulation No. 49/2022.

VAT is collected by VAT-registered businesses (PKP). Businesses must register as PKP if their annual revenue exceeds Rp 4.8 billion. Below that threshold, registration is optional. Once registered, the PKP must issue tax invoices and remit VAT on all taxable supplies.