VAT Return | Indonesia Tax Guide 2025 (35)
Indonesia
VAT
Tax Return
Tax return
2025-03-04 09:15:35
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This issue's introduction
Tax Return - VAT
Tax Administration Agency
Tax Return - VAT
The tax location in Indonesian VAT regulations refers to the location where the taxpayer is registered as a VAT taxpayer.
Once registered, the taxpayer is required to pay VAT on each taxable goods or services sold. However, if the sales activities take place overseas, no VAT is required.
If an entrepreneur has several business locations, each business location constitutes his tax location and he must register as a VAT taxpayer at all locations.
If these business locations are managed by the same tax office, one of the locations should be selected as the tax location.
If different business locations are managed by different tax offices, he must register as a VAT taxpayer at the tax offices in charge of all business locations.
(2) When the tax liability occurs
VAT is levied on the accrual basis, that is, the tax liability occurs when the taxable goods or services are delivered. Even if the purchaser has not paid, the VAT liability occurs once the goods or services are delivered. This principle also applies to electronic transactions. However, if the purchaser has paid before the goods or services are delivered, the VAT liability occurs when the payment is received.
① Movable property transactions
VAT liability occurs when taxable goods are delivered. Movable property is deemed to have been delivered when one of the following conditions is met:
A. Directly delivered to the buyer or his representative;
B. Directly delivered to the recipient, applicable to the case where movable property is used for personal use, gift, or delivery of goods between the head office and branches;
C. Delivery of goods between branches;
D. Delivery by express delivery;
E. The price of the goods has been confirmed as receivables or income, or an invoice has been issued.
The above time points are also the time when VAT invoices should be issued.
② Fixed asset transactions
When the ownership or right to use the fixed asset has been legally or physically transferred, it can be confirmed that the fixed asset has been provided to the buyer. Legally speaking, when the property transfer agreement is signed, the ownership of the fixed asset has been transferred to the buyer. Therefore, the time when this event occurs is the tax time point.
If the ownership of the goods has been transferred to the buyer before the transfer agreement is signed, the VAT liability occurs when the ownership is transferred.
③ Intangible asset transactions
The following situations can be confirmed as sales of intangible assets
A. The price of the goods has been confirmed as receivables or income, or an invoice has been issued;
B. The contract or agreement has been signed. If it is not possible to confirm whether the contract or agreement has been signed, VAT is paid when the recipient starts to use the intangible asset.
④ Transactions of assets that were not originally sold
During the company's suspension of business, some assets that were not originally held for trading may still be available. Transactions of these assets are subject to VAT in the following circumstances:
A. The notary signs the termination deed;
B. The company stops operating in accordance with the company's articles of association;
C. The court orders the company to terminate operations:
D. According to on-site inspections or existing documents, it is found that the company has no operating activities.
The above assets include raw materials, semi-finished products or finished products.
⑤ Merger, integration or expansion
In the process of merger, integration or expansion, the transfer of goods is subject to tax if:
A. The merger, integration, expansion, split, acquisition or change of the legal form of the business entity has been agreed upon;
B. The merger, integration, expansion, split or acquisition contract has been signed by a notary. In this case, the merger, integration, expansion, split or acquisition refers to the events stipulated in the Company Law. The above-mentioned expansion refers to the division of a business entity into two independent entities. This process is usually achieved by establishing a new legal entity and transferring its assets to the newly established entity without dissolving and liquidating the original entity. A company can also change its legal form, for example, from a partnership to a company.
⑥ Services and intangible assets
The following situations can be regarded as sales of services or intangible assets:
A. When receivables or revenues are recognized, or when invoices are issued;
B. When the contract is signed, the date of sale is unknown;
C. Services or intangible assets provided free of charge or for private use are in a state of availability
If the services are provided outside Indonesia, VAT is payable in the following situations:
A. When the price is recognized as receivables or revenues, or when invoices are issued;
B. When the invoice is paid.
If the above events cannot be confirmed, VAT is payable on the date of contract signing. For taxable intangible assets or services, the VAT liability arises when they start to be used in Indonesia, and the tax must be paid before the 15th of the following month. If the importer is a VAT taxpayer, the tax will be considered as part of the VAT input and may therefore be deducted.
⑦ Export
The VAT liability for exports arises when the goods are shipped overseas. For services or intangible assets, the tax liability arises when the price is recognized as receivables or revenues.
⑧Advance Payments
Prepayments made in advance are subject to VAT. Any advance payment for the issuance of a tax invoice is subject to VAT. Once the goods are delivered, the remaining amount is subject to VAT even if the full amount is not paid.
(3)Declaration of Taxes
Once registered as a VAT taxpayer, the taxpayer must submit a monthly VAT return, which should include all sales and purchases of goods and services by the taxpayer during the month. The deadline for VAT declaration is the filing date of the monthly tax return in the month following the month in which the relevant transactions occurred.
Non-residents of Indonesia provide certain services, such as the use of taxable intangible assets or offshore services. The recipients of these services are obliged to declare and pay import VAT by self-assessment on the 15th of the following month.
If the output tax is higher than the input tax, it means that the taxpayer has underpaid VAT. In this case, the taxpayer must remit the underpaid tax to the treasury through a bank before the end of the following month and must complete the payment before submitting the VAT return.
The taxpayer's input tax may also be higher than the output tax, resulting in overpayment of tax. Taxpayers can choose to offset the overpaid tax in a later tax period or apply for a refund at the end of the fiscal year. The following taxpayers can choose to apply for a refund in each tax period:
① Taxable enterprises that export tangible taxable goods;
② Taxable enterprises that provide taxable goods or taxable services to taxpayers who pay VAT;
③ Taxable enterprises that provide tax-free goods and services;
④ Taxable enterprises that export intangible taxable goods;
⑤ Taxable enterprises that export taxable services;
⑥ Taxable enterprises that have not paid VAT because they have not started production.
If a correction is made in the VAT return for the previous tax period, the VAT taxpayer must submit the correction for that specific period when filing the VAT return (no correction form is provided).
There are three types of VAT returns in Indonesia, which are applicable to general VAT taxpayers, tax collectors, and VAT taxpayers subject to simplified collection.
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