Value-added tax (VAT) is one of the most important things that many companies are highly aware of. VAT is a tax on the sale of certain goods and services in Indonesia, paid to the Indonesian tax authorities. When talking about company registration in Indonesia, as a business owner, you need to consider the benefits you might gain and responsibilities you will have for registering your company with VAT liabilities. But when should you do that and how should you begin reporting your liabilities? This article aims to answer the questions you have about VAT registration for your company.
If you have a yearly revenue of US$360,000 (IDR 4.8 billion), you are required to register your company as VAT-liable, especially when the majority of your annual revenue comes from other organisations in Indonesia.
For companies with annual revenue of no more than IDR 4.8 billion, you can choose to register as a VAT-liable company if you want to.
If your company is registered as VAT-liable, you will need to pay VAT for the below items:
In Indonesia, the VAT rates vary depending on the type of services and products. However, the rate is generally at 10% while some goods and services are higher or lower; and some are exempted from VAT.
Some products and services can have VAT exemption in Indonesia with the incentives provided by the government.
No. Your business will then be exempted from VAT registration as well. That means you are unable to have VAT refund for your business expenses.
If your business conducts relatively big amount of transactions on a regular basis in Indonesia, it will be beneficial for you to register your company with VAT liabilities.
Registering as a VAT-liable company in Indonesia may be a complex process for you if you are not familiar with the local regulations. It takes time and paperwork, which may be laborious to some foreign investors.
Below is a summary of the application process, and if you are still confused, please contact Cekindo directly to learn more.
Update from government: More Scope of Services in Export are Exempted from Value-Added Tax
Approval or Rejection of Application
Visit to the Tax Office
Cekindo has been offering company registration services in Indonesia to thousands of companies around the world who are interested in penetrating the Indonesian market.
We are dedicated to making your VAT-liable company formation in Indonesia incredibly painless and hassle-free. For individuals or companies wishing to establish themselves in Indonesia, you should seek Cekindo’s expert advice by booking a free consultation with us now.
Fill in the form below or visit one of our offices in Jakarta, Bali and Semarang.