Tax rates and tax base
The VAT rate is typically 10%. This may be increased or decreased to 15% or 5% according to a government regulation. However, VAT on the export of taxable tangible and intangible goods as well as export of services is fixed at 0%. Certain limitations for the zero-rated VAT apply to export of services.
VAT is calculated by applying the VAT rate to a relevant tax base. In most cases, the tax base is the transaction value agreed between the parties concerned. For certain events or situations, other criteria must be used as the tax base, including:
- Market value for transactions between related parties, remaining inventories of taxable goods at a company’s dissolution, and sales of (non-inventory) assets originally not for sale;
- Cost of sales for own-use or free gifts and internal deliveries of taxable goods (e.g., between branches, or from the head office to branches);
- Auction price for deliveries of taxable goods through an auction officer;
- Agreed price for deliveries of taxable goods through an intermediary trader;
- 5% of the total service charges, provisions, and discounts for factoring services;
- Average selling price for video and audio recording products;
- Average result per film for movies;
- IDR 12 million per copy of imported movies;
- 4% of total costs incurred or paid, exclusive of the acquisition price of land, for the self-construction of a building;
- Retail selling prices for deliveries or imports of tobacco products;
- 10% of the actual billing for package shipment services, tour and tourism agency services.
By law, all goods and services, unless otherwise stated, constitute taxable goods or taxable services. The legal negative list sets out which goods and services are categorized as non- taxable.