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Tax Glossary
PKP (VAT-Registered Entrepreneur)
A PKP is a VAT-registered entrepreneur required to collect, remit, and report VAT. Governed by Article 1 paragraph 15 of the VAT Law. Registration is mandatory when annual turnover exceeds Rp 4.8 billion (PMK No. 197/PMK.03/2013); voluntary registration is available below this threshold. Once registered, a PKP must issue a Tax Invoice for every BKP/JKP supply, remit VAT by end of the following month, and file the monthly VAT return by the same deadline.
Tax Glossary
VAT (Value Added Tax / PPN)
VAT (Pajak Pertambahan Nilai / PPN) is a tax levied on every supply of taxable goods (BKP) and/or taxable services (JKP) within Indonesia's customs area. Governed by Law No. 8/1983 on VAT, last amended by Law No. 7/2021 (UU HPP). The standard VAT rate is 11% since 1 April 2022, rising to 12% from 1 January 2025. PPN is an indirect tax: the economic burden falls on the final consumer, while the registered taxpayer (PKP) acts as a collector, remitting the difference between Output Tax (PK) and Input Tax (PM) to the state.
Tax Glossary
Monthly VAT Return (SPT Masa PPN)
The Monthly VAT Return (SPT Masa PPN) is the monthly report that every PKP must submit to DJP, summarizing Output Tax, creditable Input Tax, and the net VAT payable or overpaid. Governed by Article 15A of the VAT Law and PER-29/PJ/2015. The filing deadline is the end of the following month after the tax period. Since April 2022, filing is done through the e-Faktur application, which auto-generates return data from uploaded invoices.
Tax Glossary
Tax Base (DPP)
The Tax Base (DPP) is the selling price, compensation, import value, export value, or other value used to compute VAT due. Governed by Article 1 paragraph 17 and Article 8 of the VAT Law. Typically, DPP equals the selling price excluding VAT. For specific transactions, DPP uses alternative values set by the Minister of Finance (PMK No. 75/PMK.03/2010), such as for used motor vehicles, travel agencies, courier services, or disposal of assets not originally intended for sale.
Tax Glossary
Output Tax (Pajak Keluaran)
Output Tax (Pajak Keluaran) is the VAT that a PKP must collect when supplying taxable goods (BKP), taxable services (JKP), or exporting. Governed by Article 1 paragraph 25 of the VAT Law. Output Tax = DPP x applicable VAT rate. Collection must be evidenced by a Tax Invoice. The difference between Output Tax and Input Tax is either the amount to remit (if PK > PM) or the overpayment to claim back (if PM > PK).
Tax Glossary
Taxable Services (JKP)
Taxable Services (JKP) are services subject to VAT under the PPN Law. Governed by Article 1 paragraph 6 and Article 4A of the VAT Law. Like BKP, all services are JKP by default unless explicitly exempt. Exempt services include: medical healthcare, social services, postage stamp mail delivery by PT Pos Indonesia, financial services, insurance, religious services, education, and public transportation. PKPs supplying JKP must issue a Tax Invoice; VAT is due at the point of service delivery.
Tax Glossary
Taxable Goods (BKP)
Taxable Goods (BKP) are goods subject to VAT under the PPN Law. Governed by Article 1 paragraph 3 and Article 4A of the VAT Law (No. 8/1983 as amended by No. 7/2021). As a rule, all goods are BKP unless explicitly exempted by law. Exempted goods include: raw minerals extracted directly from the source, basic food staples (rice, corn, sago, soybeans, sugar, vegetables, and fruit), and food/beverages served at hotels, restaurants, and eateries (subject to regional tax instead).
Tax Glossary
Tax Invoice (Faktur Pajak)
A Tax Invoice (Faktur Pajak) is proof of VAT collection issued by a PKP when supplying taxable goods (BKP) or services (JKP). Governed by Article 13 of the VAT Law and PER-03/PJ/2022. The invoice must be issued at the point of supply, or by the end of the delivery month if payment is received before supply. A late or non-compliant invoice is invalid and cannot be credited as Input Tax. Since 2014, Tax Invoices must be issued electronically via the DJP's e-Faktur application.
Tax Glossary
Tax Refund (Restitusi)
A Tax Refund (Restitusi) is the return of overpaid tax to a taxpayer who has paid, or had withheld/collected, more than the actual tax due. Governed by Articles 17 and 17B of UU KUP and Article 9 paragraph (4) of the VAT Law. The process: apply in the return, DJP audits, and issues an SKPLB if the overpayment is confirmed. Processing times: 12 months for corporate PPh; 12 months for general VAT; 8 months for low-risk PKP (accelerated refund). DJP pays 2% monthly interest on late refunds.
Tax Glossary
Input Tax (Pajak Masukan)
Input Tax (Pajak Masukan) is the VAT that should have been paid by a PKP on purchases of taxable goods (BKP) and/or services (JKP), utilization of offshore JKP, or importation of BKP. Governed by Article 1 paragraph 24 of the VAT Law. Input Tax is credited against Output Tax in the same tax period. If Input Tax exceeds Output Tax, the excess can be carried forward or refunded. Non-creditable Input Tax includes: defective Tax Invoices and BKP/JKP purchases unrelated to the business.
Tax Glossary
PKP Registration
PKP Registration (Pengukuhan PKP) is the formal process by which the KPP registers an entrepreneur as a VAT-registered taxpayer, either upon application or ex officio. Governed by Article 2 paragraph (2) of the VAT Law and PER-02/PJ/2018. Entrepreneurs whose turnover exceeds Rp 4.8 billion in a fiscal year must apply for PKP status by the end of the following month. Upon registration, the entrepreneur receives a PKP Certificate and must issue e-Faktur from the following month. Late registration may result in sanctions.
Tax Glossary
Advance Refund of Tax Overpayment (Pengembalian Pendahuluan)
An advance refund of tax overpayment is the disbursement of overpaid tax to the taxpayer through formal review (penelitian) rather than full audit (pemeriksaan). This mechanism provides a fast track for taxpayers meeting specific criteria or requirements as set out in Articles 17C and 17D of the General Tax Provisions Law (UU KUP), and Article 9(4c) of the VAT Law (UU PPN). The technical procedure is governed by PMK 28 of 2026, effective 1 May 2026, which revokes a chain of earlier regulations from PMK 39/2018 through PMK 119/2024. After disbursement, the Directorate General of Taxes retains the right to conduct an audit for substantive verification. If a shortfall is found, an Assessment of Underpayment (SKPKB) and penalties will be issued.
Tax Glossary
Monthly Tax Return (SPT Masa)
The Monthly Tax Return (SPT Masa) is the form used by taxpayers to report and/or pay tax due in a one-month tax period. Governed by Article 3 paragraph (1) of UU KUP. Unlike the Annual Return (SPT Tahunan), the SPT Masa is filed monthly. Common types: SPT Masa PPh 21 (due by 20th), PPh 23 (20th), PPh 25 (20th), and SPT Masa PPN (end of following month). Late filing penalties: Rp 100,000 per income tax monthly return; Rp 500,000 per VAT monthly return.
Tax Glossary
Tax Overpayment Assessment (SKPLB)
An SKPLB (Tax Overpayment Assessment) specifies the overpaid tax amount determined after audit-based calculation. Governed by Article 17 of UU KUP. DJP issues an SKPLB when tax credits or payments exceed the tax liability. It must be issued within 12 months of receiving a complete refund application. DJP must refund the overpayment within 1 month of SKPLB issuance. Late refunds incur 2% monthly interest payable to the taxpayer.