The Indonesian Directorate General of Taxes (DGT) has issued PER-1/PJ/2025 (PER-1) to offer guidance for taxable entities (pengusaha kena pajak, or PKPs) regarding the implementation of the new VAT rate of 12%. The regulation is intended to provide legal certainty and clear technical guidelines for issuing tax invoices (faktur pajak) in accordance with Minister of Finance Regulation No. 131/2024 (PMK-131).
VAT invoices issued during the transitional period
In principle, VAT invoices and certain documents that are equivalent to VAT invoices (collectively, VAT Invoices) must be created by the PKP correctly, completely, and clearly. Under PMK-131, for most goods and services, the 12% VAT rate is applied on a tax base (dasar pengenaan pajak, or DPP) in the form of ‘the other value’ (DPP nilai lain), which is set at 11/12 of the import value, selling price, or compensation. This renders the ‘effective’ VAT rate 11%.
However, due to the sudden implementation of the new rule (the regulation was issued on December 31 2024 and took effect the next day), the DGT provides a grace period for VAT Invoices under this category that are issued between January 1 and March 31 2025, where (i) VAT invoices using a 12% rate on a full/normal tax base, or (ii) VAT invoices using an 11% rate on a full/normal tax base are considered valid as long as they include all the other information that is required under the VAT law. Certain documents that are equivalent to a VAT Invoice that have not stated the DPP nilai lain amount are also considered valid.
Where VAT has been collected using a 12% rate as per point (i) above, the party from which it was collected (the buyer) may request a refund from the seller on the excess VAT collected, and based on this request, the seller shall make an amendment or a replacement of the relevant VAT Invoice.
VAT invoices issued by retailers to end customers for luxury goods
Under PMK-131, luxury taxable goods that are liable for luxury goods sales tax are subject to the 12% VAT rate, with a transitional rule for domestic deliveries to end consumers in January 2025, whereby the 12% rate is applied on a DPP nilai lain that is set at 11/12 of the selling price. The VAT rules during the transitional period and thereafter are as follows:
Transitional period (January 1–31 2025) – VAT is calculated using a 12% rate, applied to 11/12 of the selling price as the tax base; and
Effective from February 1 2025 – VAT is fully applied at 12% of the actual selling price.
However, PER-1 stipulates that the above transitional rule does not apply on deliveries by retailers for:
Land transportation in the form of motor vehicles;
Water transportation in the form of cruise ships, excursion ships, ferries, and/or yachts;
Air transportation in the form of airplanes, helicopters, and/or hot air balloons;
Land and/or buildings; and
Firearms and/or firearm bullets.
This regulation aims to facilitate a smooth transition to the new VAT rate while ensuring compliance with Indonesian tax laws. PKPs are advised to review their invoicing processes and make any necessary adjustments to comply with these new requirements.
The regulation became effective on January 3 2025.
New decree on VAT invoice issuance for certain taxable entities
To streamline the issuance of tax invoices for certain PKPs that need to issue a significant number of tax invoices using the taxpayer portal module, the DGT has issued Decree No. KEP-24/PJ/2025. To facilitate compliance, and in accordance with Article 2(4) of DGT Regulation No. PER-13/PJ/2024, the DGT has established guidelines for these PKPs:
Definition of ‘specific PKPs’ – PKPs that issue at least 10,000 tax invoices per month are categorised as specific PKPs.
A list of specific PKPs – the list of PKPs meeting the criteria is included in an official attachment to the decree.
Authorised e-invoicing methods – the PKPs in question may issue tax invoices using the following methods:
An e-Faktur client desktop application; or
An e-Faktur host-to-host application.
An alternative submission method – these PKPs may still generate tax invoices using the taxpayer portal module under the Core Tax Administration System.
This regulation provides greater flexibility for high-volume PKPs, ensuring efficiency and compliance with the latest tax administration framework.
The regulation became effective on January 15 2025.
Updated regulation on customs and excise audits
The Indonesian Ministry of Finance (MoF) has issued a new regulation, No. 114 of 2024 (PMK-114) concerning Customs Audits and Excise Audits, as the previous related regulations – such as MoF Regulation No. 200 of 2011 (PMK-200), as amended by MoF Regulation No. 258 of 2016 (PMK-258) – needed to be replaced to optimise customs audits and excise audits, and to increase supervision through the customs and excise audit mechanism. PMK-114 was also issued to implement statutory provisions in the field of customs and/or excise.
No. | Topic | PMK-200, as amended by PMK-258 (before) | PMK-114 (current) |
1 | Regulation on business processes | Not comprehensively regulated | PMK-114 establishes a comprehensive regulatory framework governing the business process of customs and excise audits |
2 | Audit planning procedure | Not explicitly stated | A new provision (Article 6) introduces detailed audit planning procedures and guidelines |
3 | Legal basis for audit sampling | Not explicitly mentioned | Establishes a legal framework for implementing audit sampling techniques in physical inspections and data validation (articles 16 and 23) |
4 | Use of audit sampling techniques | Limited scope for audit sampling in data verification | Expands the use of audit sampling in data verification and physical stocktaking, enhancing audit efficiency |
5 | Audit period | The general audit period was set for two years | Reduced to 21 months to enhance audit timeliness (Article 5) |
6 | Avoiding expired import declarations (PIBs) | No specific mention of preventive measures | Adjustments in audit timelines aim to prevent PIBs from expiring before field audits commence |
7 | Audit reporting | Laporan hasil audit (LHA) was the standard audit report | The audit report format has been changed from LHA to laporan pemeriksaan audit (Article 22) |
8 | Audit termination reports | No specific format for terminated audits | A dedicated special report is required for audits that are discontinued |
9 | Audit team authority | Limited authority for auditors | Grants additional authority, including the ability to request information from external entities, involve expert witnesses, and take enforcement actions such as sealing goods and any means of transport suspected of customs/excise violations |
10 | Imposition of penalties and enforcement | Not explicitly regulated | Introduces explicit provisions on blocking, security measures, and enforcement actions in Chapter 6 (articles 19–21) |
PMK-114/2024 significantly enhances the clarity, efficiency, and effectiveness of customs and excise audits. By introducing a structured audit planning process, expanding audit sampling techniques, shortening audit periods, and improving reporting mechanisms, this regulation aims to strengthen compliance and oversight in the customs and excise sectors. Businesses should take note of these changes and ensure compliance with the new requirements to avoid potential issues during audits.
Implementation and transitional provisions
PMK-114 becomes effective 60 days after its promulgation on December 31 2024. However, any ongoing customs and excise audits initiated before the regulation takes effect will continue to follow the provisions of PMK-200, as amended by PMK-258.
