Indonesia Tax: Types of Value-added taxes and rates

Value added tax (VAT) is due on the transfer of taxable goods or the provision of taxable services.

There are three types of VAT taxes:

1. Standard Type : 10%
2. Zero Rated - 0%
3. Exempted - 0%

1. Standard Type- 10% ( All other taxable goods and services)

The delivery of  goods that are taxable by an organisation in Indonesia, the accounts of taxable goods, providing taxable services in Indonesia, Usage in Indonesia of intangible taxable goods from outside Indonesia, utilization of foreign taxable services in Indonesia, the distribution of fixed assets and export services by an organisation in Indonesia, except for certain sections of exported services as set out further below.

2. Zero rated: 0% ( Exports of goods and services)

• toll manufacturing, maintenance, repair and movable goods outside the Customs Area, freight forwarding related to exported goods, Building construction consulting, building plans outside the Customs Area, technology and information, and research and development services
• Transportation on rental services in the form of rental of aircraft and shipping activities
• Management and business consulting services, legal consulting services, interior/Architecture  design, human resources services, engineering services, s marketing services, accounting services, financial audit services, and tax related services
• trade services in the form of services to find goods sold within the Customs Area for export

3. Exempted : 0% (Non Taxable)

VAT not collected: deliveries of goods to a bonded zone; and deliveries of goods and services to a free trade zone.

certain goods and services that are not subject to VAT are known as VAT Free.E.g, goods that are taken directly from their source like crude oil, natural gas, coal, financial service like banking, insurance and finance leasing. Hotels, restaurants and entertainment are not subject to VAT — instead, they are subject to local taxes which is not a creditable tax.