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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 Borne by Government (DTP)
Tax Borne by Government, abbreviated DTP from the Indonesian "Ditanggung Pemerintah", is a tax facility under which the tax that would normally be owed is paid by the government through the tax subsidy line of the state budget rather than by the relevant taxpayer. The scheme applies to several taxes, notably Income Tax (PPh) and Value Added Tax (PPN), and is generally limited to a defined period and specific sectors. The government uses DTP as a short-term fiscal stimulus to support household purchasing power, accelerate recovery in specific industries, or back strategic sectors. Taxpayers continue to report transactions as usual, but the tax amount is recorded as borne by the government. The legal basis for each DTP facility is set by a separate Minister of Finance Regulation that defines the criteria, validity period, and reporting procedures.
Tax Glossary
TKDN (Local Content Level)
TKDN (Tingkat Komponen Dalam Negeri, or Local Content Level) is the percentage of domestically produced components in a good or service, measured against the total components that make up the product. A higher TKDN means a larger share of the product comes from Indonesian materials, labor, and production processes. The government uses TKDN as a condition for granting certain facilities, including tax facilities. In the context of electric vehicle incentives, government-borne VAT (PPN DTP) is granted only to vehicles produced domestically with a minimum TKDN of 40 percent, so fully imported (CBU) cars do not qualify. TKDN is not a type of tax: it is a measure of local content that determines whether a product is eligible for an incentive.
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
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
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
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
Kanwil DJP (Regional Tax Office)
Kanwil DJP, the Regional Tax Office (Kantor Wilayah Direktorat Jenderal Pajak), is a vertical institution under Indonesia's Directorate General of Taxes (DJP) that supervises a group of local Tax Service Offices (KPP) within its working area. Under Minister of Finance Regulation (PMK) No. 18 of 2026, Kanwil DJP is responsible for coordination, technical guidance, evaluation, oversight, and analysis and follow-up of taxpayer compliance in its region. Since PMK 18/2026 took effect on 1 April 2026, DJP functional and implementing officer positions sit only at Kanwil DJP and no longer at KPP. Kanwil DJP is grouped into the Large Taxpayer Office (LTO), Kanwil DJP Jakarta Special, and the other regional offices organised by province or grouped provinces. Kanwil DJP outside LTO and Jakarta Special now also has authority over VAT centralisation requests (pemusatan tempat PPN terutang) for multi-branch VAT-registered businesses (PKP).
Tax Glossary
Aggregated Tax Invoice (Faktur Pajak Digunggung)
An aggregated tax invoice (faktur pajak digunggung) is a tax invoice issued by a Retail PKP (Pengusaha Kena Pajak Pedagang Eceran or PKP PE) for the delivery of taxable goods (BKP) or services (JKP) to end consumers, without including buyer identity, name, or signature. The mechanism is governed by Article 14 paragraph (1) of the Law on General Provisions and Procedures of Taxation (UU KUP) and Articles 51 through 55 of Director General of Taxes Regulation Number PER-11/PJ/2025. The term digunggung reflects the practice of reporting the total transaction value on a single line in the periodic VAT return, without per-invoice detail. Retail PKP serving end consumers directly, such as mini-markets, clinics, restaurants, or retail shops, may use this mechanism. If a buyer does not meet end-consumer criteria, the PKP must issue a full per-transaction tax invoice.