Legal Insights

Changes in the VAT Law

12 Sep 2022


On 29 October 2021 the new “Harmonization of Tax Regulations” law (Undang-undang Harmonisasi Peraturan Perpajakan / “HPP Law”) was enacted.  With the enactment of the HPP Law, the provisions of the prevailing tax laws as amended with the Job Creation Act (Law No. 11 Year 2020) are still in effect, except where a clause is specifically revoked by the HPP. The most important changes the HHP law will make in the VAT law are:

  • The increase of VAT rate to 11% applicable from 1 April 2022 and to 12% from 1 January 2025 onwards.
  • Redefinition of VAT-able goods/services, which include:


  Become VAT-able goods/services  

  Remain as non-VATable goods/services  
  but with certain requirements
  Become VAT-able strategic goods/ services that  
  are exempted from VAT
  • Mining or drilling products, taken directly from the source
  • Gold bars other than for the Government’s forex reserve
  • Non-advertising broadcasting services
  • Postal services
  • Public phone services
  • Money transfer by postal services
  • Food and beverages served in hotels/ restaurants, that are
    subject to regional tax
  • Hotel, parking, catering, arts and entertainment services that are subject to regional tax
  • Public services (i.e., services provided by the Government that cannot be provided by others)
  • Basic necessity products
  • Medical services under the national health insurance program
  • Financial services
  • Insurance services
  • Educational services
  • Non-profit social services
  • Public transportation services
  • Labor services


Further clarifications to be published in an implementing regulation.- VAT entrepreneurs whose annual gross turnover is less than certain amount and who are engaged in certain business activities that are not obliged to maintain bookkeeping in Indonesia are allowed to remit and pay the VAT due in a certain amount. Further clarifications to be published in an implementing regulation. 

About the Author
Jacob Zwaan LL.M. - Taxation