Objects, Rates, and Tax Base (DPP)

Objects and Non-Objects of VAT (Value Added Tax)

Objects of VAT

Based on the VAT Law (Undang-Undang PPN), VAT is imposed on:

• The delivery of Taxable Goods (Barang Kena Pajak - BKP) or Taxable Services (Jasa Kena Pajak - JKP) within the Customs Area (Daerah Pabean) by an entrepreneur.

• The import of Taxable Goods (BKP).

• The utilization of Intangible Taxable Goods (BKP Tidak Berwujud) or Taxable Services (JKP) from outside the country within the Customs Area.

• The export of Tangible Taxable Goods (BKP Berwujud), Intangible Taxable Goods (BKP Tidak Berwujud), or Taxable Services (JKP) by a Taxable Entrepreneur (Pengusaha Kena Pajak - PKP). The VAT Law adheres to the negative list principle, which means that fundamentally, all goods and services are objects of VAT, except for those specifically excluded by the law.

Non-Objects of VAT Some types of goods and services that are not subject to VAT include:

• Food and beverages served in hotels, restaurants, and similar establishments (as they are subject to local government tax/regional tax).

• Money, gold bars (for foreign exchange reserves), and securities.

• Religious services, art and cultural services, entertainment services, hotel services, parking provision, and catering services (all of which are also subject to local government tax/regional tax).

• Services provided by the government in the framework of carrying out general governance.

Rates and Tax Base (Dasar Pengenaan Pajak - DPP)

Rates

• 11% (effective since April 1, 2022).

• 12% (at the latest, January 1, 2025).

• 0% (for the export of Taxable Goods and Taxable Services). The 0% rate does not mean tax-free, but rather that the VAT paid upon the acquisition of goods can be credited back.

Tax Base (DPP) The Tax Base (DPP) is the value used as the basis for calculating the VAT due (PPN Terutang). VAT is calculated by multiplying the VAT rate by the Tax Base (DPP). The types of DPP include:

• Selling Price (Harga Jual): For the delivery of Taxable Goods (BKP).

• Compensation/Consideration (Penggantian): For the delivery of Taxable Services (JKP).

• Import Value (Nilai Impor): For imported Taxable Goods (BKP).

• Export Value (Nilai Ekspor): For exported Taxable Goods/Taxable Services (BKP/JKP).

• Other Value (Nilai Lain): A value specifically stipulated for certain transactions.