On July 25 2025, the Indonesian Ministry of Finance issued a regulation, No. 53/2025 (PMK 53/2025), that amends PMK 11/2025 and adjusts the provisions for “other values” as the tax base and “certain amounts” for VAT. The issuance of this regulation aims to provide legal certainty while adjusting the imposition of VAT on certain services.
The key changes introduced in this regulation relate to the following:
The insurance sector – VAT on commissions or fees received by insurance agents and insurance/reinsurance brokerage companies is now set at specific amounts. For insurance agents, the VAT is calculated at 10% * 11/12 of the VAT rate on commissions received, while for brokerage companies, it is set at 20% * 11/12 of the VAT rate on commissions.
Self-construction activities – the VAT is set at 20% * 11/12 of the VAT rate multiplied by the total cost incurred for the construction, excluding the cost of land acquisition.
PMK 53/2025 became effective on August 1 2025.
Stricter requirements for preliminary refunds and new restrictions for individual taxpayers
On August 13 2025, the Directorate General of Taxes (DGT) issued a regulation, No. PER-16/PJ/2025, that amends PER-6/PJ/2025 on the procedures for preliminary refunds of tax overpayments. The new regulation primarily focuses on simplifying the preliminary tax refund process for taxpayers in certain categories.
The general key points that are regulated by PER-16/PJ/2025 are as follows.
Expanded input VAT credits
The new regulation outlines the requirements for preliminary VAT refunds. To be eligible, input VAT must be substantiated by official documents, including:
VAT invoices;
Equivalent documents;
Import declarations;
Tax payment slips; and
Customs VAT receipts.
These documents must be validated and electronically exchanged through the DGT system. This requirement aims to ensure the validity and accuracy of the input VAT being claimed. The regulation also clarifies that only self-paid VAT (for the utilisation of services or intangibles from abroad) is creditable. Any input VAT that does not fulfil these requirements will be excluded.
Special purpose companies and collective investment contracts
The regulation clarifies the refund process for special purpose companies and collective investment contracts, which are categorised as low-risk VAT-registered businesses. It also explicitly excludes any input VAT that fails to meet these requirements from preliminary refunds.
This ensures that preliminary refunds related to real estate acquisitions by special purpose companies or through collective investment contracts adhere to the same stringent validation standards introduced in the preceding requirement.
Specific provisions for individual taxpayers
A new provision addresses overpaid tax refunds for individual taxpayers for the fiscal year 2024. This applies to taxpayers who made an error in crediting their Article 21 withholding tax, resulting in an overpayment. In such cases, the DGT will not issue a preliminary tax refund decree. The tax overpayment is considered non-existent and will not be followed up with an audit.
This provision is applicable solely to individuals who receive income from a single employer or pension source. It does not accommodate cases involving external zakat (religious donation) deductions or discrepancies stemming from reporting inaccuracies.
This regulation is designed to provide greater legal certainty and streamline the process of preliminary tax refunds, while ensuring the accuracy of tax input credits and addressing specific issues for individual taxpayers.
Additional VAT incentives borne by the government for the housing sector
The Ministry of Finance issued Regulation No. 60/2025 on August 15 2025, effective from August 25 2025, to continue the policy of VAT borne by the government for the housing sector, with an extended incentive period effective from July 1 to December 31 2025. The policy aims to sustain economic growth by stimulating household purchasing power and supporting the housing industry.
The government bears 100% of the VAT on the portion of the selling price of landed houses or apartment units up to IDR 2 billion, provided that the total selling price of the unit does not exceed IDR 5 billion and the property is in a ready-for-occupancy condition. This VAT incentive may only be utilised by one individual for one housing unit, and is available to Indonesian citizens and foreign nationals who meet the requirements for property ownership in Indonesia.
The mechanism for granting this incentive is through valid transactions; namely, a sale and purchase deed or a fully paid sale and purchase binding agreement signed before a notary, accompanied by an official handover report. The VAT-able “entrepreneur” (developer) is required to:
Issue a VAT invoice using code 07;
Include the statement “VAT borne by the government as execution of PMK No. 60 of 2025”; and
Report it in the monthly VAT return.
Failure to meet the requirements will result in the revocation of the VAT incentive, and the tax authority reserves the right to collect the payable VAT. Furthermore, this incentive cannot be combined with other VAT exemptions that the property may qualify for.
Temporary goods and services tax reductions for hospitality, food, and/or beverages
The governor of the Special Capital Region of Jakarta issued Governor’s Decree No. 722/2025 on August 25 2025, which will remain in effect until January 31 2026. This policy was introduced to support regional economic growth, particularly in the hospitality and food and beverage sectors, which have been impacted by the government’s budget efficiency measures. In addition, the regulation aims to encourage taxpayer compliance in fulfilling regional tax obligations.
The key points of the governor’s decree are as follows:
A tax reduction for hotel services – taxpayers are granted a 50% tax reduction for the tax period of August to September 2025 and a 20% reduction for the period of October to December 2025; and
A tax reduction for food and/or beverages – a 20% tax reduction applies for the tax period of August to December 2025.
To be eligible for these reductions, taxpayers must submit a statement agreeing to electronically report their business transaction data using the Jakarta provincial government's E-TRAPT (Electronic Transaction Reporting Agent) system.
The reduction is granted automatically by the authorities (ex officio), meaning that taxpayers are not required to submit a special application.
The governor’s decree is designed to ease the financial burden on taxpayers in these sectors and encourage greater compliance with regional tax obligations.
