VAT registration process in Indonesia
There are various types of taxes in Indonesia such as Corporate Tax, Individual Income Tax, Custom & Excise, Land & Building Tax and Value-Added Tax VAT). This article will provide insight about how to get a business registered for VAT in Indonesia.
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The value-added tax (VAT) is needed for certain goods and services sold in Indonesia. VAT applies to the sale of taxable goods and services, such as
- Import and export of taxable goods and services
- Sale of taxable goods and services by an enterprise
- Use or consumption of taxable goods and services from abroad
When should you register for VAT in Indonesia?
Businesses must get VAT registered if their annual revenue reaches IDR 4.8 billion. However, note that businesses can volunteer to get registered for VAT even if their revenue is below IDR 4.8 billion. Registering as VAT-liable company is particularly important and beneficial for those businesses whose revenue mostly comes from Indonesia.
Generally, the standard VAT rate in Indonesia is 10%. However, the VAT rate can be increased or decreased to 15%, respectively to 5% for certain goods and services. It is also worth noted that some goods and services are exempt from the VAT.
Goods and Services Exempt from VAT in Indonesia:
- Natural resources
- Basic food products or commodities
- Food and drinks supplied by restaurants and hotels
- Educational services
- Money and securities
- Financial services
- Insurance
- Medical / Healthcare services
- Tourism services
- Manpower services
How to register for VAT in Indonesia?
To register as a VAT-liable company in Indonesia does not take much time however the process is not very straightforward. This process depends on the assessment by authorities and it is subject to their approval. The process of VAT registration in Indonesia generally includes the following three steps:
The first step is to fill the correct application form and attached it with relevant businesses company documents. This also includes the Tax Registration Number (NPWP) of the director. All documents are also required to get legalized by a public notary. Payment proof of the withholding tax on the office rental is also needed. If the business is using a Virtual Office, it is allowed as long as:
- The tax authority in that area allows it, and
- There is evidence of another operational office
After the application is lodged, your company will be visited by the tax officer. This field verification to check if the information provided in the application is valid or not. Don’t forget to make sure that the office is operating and there is someone present during the visit.
After the field verification from the tax office, you will be given the final decision after 5 working days. If it is approved and confirmed that you are now a VAT-liable company, you will get an access code which can be then be used for online VAT system. Lastly, as soon as you receive the code, the director of the company must visit the tax office to get the login ID and password.
What if the application is declined? There may be two possibilities for why your application is rejected. Firstly, it may be because the tax authorities in your office area don’t approve the use of a virtual office. Secondly, it may be because your failed to prove that the business is already operational in Indonesia.
How MAM Corporate Solutions can help?
Chartered Certified Accountants at MAM Corporate Solutions make sure that all requirements are fulfilled before the application for VAT registration is submitted. MAM Corporate Solutions has helped huge number of clients to not only get VAT registered but also comply with monthly and annual tax regulations.
Contact MAM Corporate Solutions
If you wish to register your business for VAT, Contact us here or provide below as much detail about your inquiry as possible to receive the most relevant response.