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On 31 December 2024, Indonesia Minister of Finance (MoF) issued Regulation No 131/ 2024 (“PMK-131”) in relation to New VAT Treatment. PMK-131 is the implementing regulation of Article 8A of Law No 8/1983 (VAT Law) which was last amended by Law No. 6/2023. PMK-131 is effective on 1 January 2025.
Key highlights of PMK-131 are:
- Starting 1 January 2025, the importation and/ or delivery of taxable goods by VAT-able Entrepreneurs within Indonesia Customs Area is subject to VAT rate of 12% on the import or sales value. The VAT rate of 12% is imposed on taxable goods that are subject to Luxury Goods Sales Tax (LGST). These taxable goods are luxury automotive vehicles (as stipulated in MoF Regulation No 141/PMK.010/2021 as amended by MoF Regulation No 42/PMK.010/2022), and luxury goods other than automotive vehicles (as stipulated in MoF Regulation No 96/PMK.03/2021 as amended by MoF Regulation No 15/PMK.03/2023 – “PMK-15”).
- Luxury goods other than automotive vehicles as stated in PMK-15 are limited to: (a) luxury residences, such as luxury houses, apartments, town houses and alike, with sales value of at least Rp. 30 billion; (b) air balloon and glider; (c) private firearms and their ammunitions, (d) private helicopter and jets; and (e) private cruise ships and yachts.
- The importation and/ or delivery of taxable goods within Customs Area by VAT-able Entrepreneurs, other than the luxury goods mentioned above, and the utilization of intangible taxable goods and/ or taxable services from outside of Customs Area in the Customs Area, is subject to VAT rate of 12% on the Adjusted Tax Base. The Adjusted Tax Base is defined as 11/12 of the import value, sales value or replacement value. So that the effective VAT rate remains at 11% (i.e., 12% x 11/12 x import value or sales value or replacement value = 11% x import value or sales value or replacement value).
- Input VAT on the acquisition or import of taxable goods and/ or services and utilization of intangible taxable goods and/ or taxable services from outside of Customs Area in the Customs Area, which are using Adjusted Tax Base in the calculation, can be credited in accordance with the prevailing tax regulations.
- VAT on the delivery of taxable goods and/or services that have used Adjusted Tax Base and those using certain amount which are separately regulated under the prevailing tax regulations, are excluded from the provisions under PMK-131. The VAT thereon shall continue to be calculated in accordance with those prevailing tax regulations.
- 6.VAT-able Entrepreneurs who deliver luxury taxable goods (as mentioned above) to end-consumers shall apply the following:
- From 1 January 2025 to 31 January 2025, the VAT payable is calculated using the VAT rate of 12% multiplied by the Adjusted Tax Base of 11/12 of sales value (i.e., effective VAT rate of 11% of the sales value); and
- Starting 1 February 2025, the VAT payable is calculated using the VAT rate of 12% of the sales value or import value.