Indonesian law on claiming input VAT as credit evolves

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Indonesian law on claiming input VAT as credit evolves

Sponsored by

sponsored-firms-gnv.png
Law 11/2020 brings a number of changes regarding VAT

Endy Arya Yoga and Aditya Wicaksono of GNV Consulting consider the recent changes to claiming VAT credit in Indonesia.

Indonesia has recently amended its VAT law by issuing Law 11/2020 concerning job creation (Law 11/2020), which took effect starting from November 2 2020.



There are several significant changes in Law 11/2020 including on the topic of claiming input VAT as VAT credit. The summary of changes between the old and the new provisions are listed below.

 

No.

New provision

Previous provision

1.

Crediting input VAT for the taxpayer, that has not made any supply or export of taxable goods or services (TGS) or in a pre-production phase:

  • May claim for any type of input VAT subject to other general provisions of uncreditable input VAT;

  •  No longer be able to claim the VAT refund in a monthly basis. Refund is available at the end of the fiscal bookkeeping year;

  • Has a three year period to make supply or export of TGS from its own production since the first input VAT claim in the VAT return. Failure to make such supply or export of TGS will result in the taxpayer having to return the refunded VAT and/or cannot carry forward/compensate the remaining VAT overpayment to the fiscal period after the abovementioned three years. A longer period than three years is available for certain industries that will be regulated under, or based on the minister of finance’s regulations.




Crediting input VAT for the taxpayer, that has not made any supply or export of TGS or in a pre-production phase:

  • May claim for input VAT related only to the acquisition of capital goods. Other types of input VAT are not creditable.

  • May claim the VAT refund in a monthly basis or at the end of the fiscal bookkeeping year.

  • Has a three year period to make supply or export of TGS from its own production since the first input VAT claim in the VAT return. Failure to make such a supply or export of TGS will result in the taxpayer having to return the refunded VAT and/or cannot carry forward/compensate the remaining VAT overpayment to the fiscal period after the abovementioned three years. A two year extension period is available.


2.

Provisions regarding the uncreditable input VAT:

  • The taxpayer can claim the input VAT for the acquisition of TGS prior to being stipulated as a taxable entrepreneur. The amount is calculated under the the guidance of crediting input VAT scheme of 80% of output VAT.

  • The taxpayer can claim the input VAT for the acquisition of TGS on which the input VAT is collected by a tax assessment.

  • The taxpayer can claim the input VAT for the acquisition of TGS discovered during the tax audit provided that the tax assessment is not submitted for further dispute and has been paid subject to other creditable input VAT provisions. The claimable input VAT amount is the principle amount not including penalty.


 

Provisions regarding the uncreditable input VAT:

  • The taxpayer cannot claim any input VAT for the acquisition of TGS prior to being stipulated as a taxable entrepreneur.

  • The taxpayer cannot claim any input VAT for the acquisition of TGS on which the input VAT is collected by a tax assessment

  • The taxpayer cannot claim any input VAT for the acquisition of TGS discovered during the tax audit.


 

Endy Arya Yoga

Partner

E: endy.yoga@gnv.id



Aditya Wicaksono

Director

E: aditya.wicaksono@gnv.id


more across site & shared bottom lb ros

More from across our site

The US president also unveiled a new 50% levy on copper imports; in other news, a UK wealth tax proposal has been criticised by the Institute for Fiscal Studies
Wim Wuyts, who had been head of the specialist tax network since 2017, is moving on to a new role with WTS’s Belgian member firm
MNEs are increasingly using algorithmic tools in TP. Sahasranshu Dash argues that data ethics should therefore plug directly into the TP design process
The Institute of Chartered Accountants in England and Wales also queried whether HMRC resources could be better spent scrutinising larger entities
Grant Thornton’s Austria tax head likens his practice to an escape room, shares his football coaching ambitions, and explains why tax is cool
Awards
ITR is delighted to reveal all the shortlisted nominees for the 2025 EMEA Tax Awards
Awards
ITR is delighted to reveal all the shortlisted nominees for the 2025 Asia-Pacific Tax Awards
The fates of pillars one and two hang in the balance after the US successfully threw its weight around in G7 and Canadian negotiations
Rafael Tena tells ITR about the ‘crazy’ Mexican market, ditching the hourly rate, and refusing to grow his fledgling firm in an ‘unstructured way’
It should be easy for advisers to be transparent about costs, Brown Rudnick partner Matthew Sharp said in response to exclusive ITR in-house data
Gift this article