Heaptalk, Jakarta — Indonesia’s government has determined the 1% increase in Value-Added Tax (VAT) rates, from 11% to 12% for luxury goods and services, effective January 1, 2025. The measure aims to maintain the consistency of the single rate principle in the Law on Harmonization of Tax Regulations (UU HPP).
“Whether it is a multi-rate or not, we remain committed to the HPP Law, which sets a single rate of 12% for luxury goods,” stated Finance Minister Sri Mulyani.
The 12% rate remains in effect as stipulated in the Tax Harmonization Law, but its calculation method has been revised. This adjustment is detailed in the Ministry of Finance Regulation (PMK) No. 131 of 2024, which addresses the Value-Added Tax (VAT) treatment for the import of taxable goods, the supply of taxable goods and services, the utilization of intangible taxable goods from outside the customs area within the customs area, and the utilization of taxable services from outside the customs area within the customs area.
In PMK-131/2024, the government outlines two primary methods for calculating the Taxable Base (DPP), covering:
- First, for luxury goods subject to the Luxury Goods Sales Tax (PPnBM), the DPP is determined based on the sale price or import value, applying a 12% rate. The formula is 12% x (12%/12% x transaction value.)
- Second, the DPP is calculated at an adjusted value equivalent to 11/12 of the import value, sale price, or compensation for goods and services other than luxury items. The formula is 12% x (11%/12% x the transaction value.)
In more detail, starting in January 2025, the application of this policy will be divided into two main categories:
Luxury Goods:
- For imports of luxury goods, VAT will be calculated at 12% x the import value.
- For the sale of luxury taxable goods (BKP), VAT will be 12% x the selling price.
- For sales to end consumers with retail invoices until January 31, 2025, VAT will be calculated at 12% of (11/12 x selling value). Nevertheless, starting from February 1, 2025, VAT will be calculated at 12% x the selling price.
- Exports of luxury goods will remain VAT-exempt, with a rate of 0%.
Non-Luxury Goods, Services, and Intangible Goods:
- For non-luxury taxable goods (BKP) imports, VAT will be 12% of (11/12 x the import value).
- For the sale of taxable goods, VAT will be 12% (11/12 x transaction value).
- For the supply of services or the use of taxable goods from outside the customs area within the customs area, VAT will be 12% of (11/12 x the payment amount).
- Exports of non-luxury goods will remain VAT-exempt, with a 0% rate.
