Insights

Indonesia Implements 12% VAT Rate from January 2025

Editorial Team 14 Feb 2025

An overview by PB Taxand, Taxand Indonesia

The Indonesian government has recently issued Minister of Finance Regulation No. 131 of 2024, which took effect from the start of January 2025. This regulation follows the mandate of Law No. 7 of 2021 and implements a 12% VAT rate while ensuring fairness for taxpayers.

The VAT calculation is divided into three categories:

1. Luxury Goods – Items such as high-end vehicles and luxury properties remain subject to Sales Tax on Luxury Goods and VAT at 12%.
2. General Goods & Services – Most taxable goods and services, including imports and digital services, will be subject to VAT at an effective rate of 11% due to transitional provisions.
3. Special Cases – Some transactions, such as self-built properties, free gifts, and services like freight forwarding and crypto trading, will follow specific tax rules rather than the standard 12% VAT.

Additional regulations have been introduced to clarify VAT treatment for specific sectors, luxury electric vehicles, and administrative sanctions.

Tax experts from PB Taxand, our Indonesian member firm have highlighted some of the key elements of this change in further detail here: Tax Updates

Article tags

Indonesia | Tax Reform | VAT