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:

a.Market value for transactions between related parties, remaining inventories of taxable goods upon a company’s dissolution, and sales of (non-inventory) assets originally not for sale;

b.Cost of sales (selling price minus gross margin) for own-use or free gifts and internal deliveries of taxable goods (e.g., between branches, or from the head office to branches);

c.Auction price for deliveries of taxable goods through an auction officer;

d.Agreed price for deliveries of taxable goods through an intermediary trader;

e.Average result per film for movies;

f.Rp 12 million per copy of imported movies;

g.20% of total costs incurred or paid, exclusive of the acquisition price of land, for the self-construction of a building;

h.Retail selling prices for deliveries or imports of tobacco products;

i.10% of the actual billing for package shipment services;

j.10% of the actual billing for tour and tourism agency services whose deliveries are not based on commissions;

k. 20% of selling price on the deliveries of gold jewellery, including services carried out by the factory in relation to gold jewellery;

l. 10% of the actual billing on the deliveries of freight forwarding services in which billing includes freight charges;

m. 100/110 of the Government subsidy value and 100/110 of the highest retail price determined by the Minister
of Agriculture for deliveries of certain fertilizer for agricultural sector.

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 categorised as non-taxable with certain exceptions, as follows:

Non-taxable Goods

a.mining or drilling products extracted directly from their sources, for example crude oil, natural gas, geothermal energy, sand and gravel, coal (before processing into coal briquettes), iron ore, tin ore, copper ore, gold ore, silver ore and bauxite ore;

b.basic commodities, for example rice, salt, corn, sago and soy beans; and drink served in hotels, restaurants and the like, either consumed in the vicinity or taken away, including food and drink delivered by caterers; and, gold bars and securities.

Non-taxable Services

a. medical health services;

b. social services, for example orphanages and funeral services;

c. mail services using stamps;

d. financial services;

e. insurance services;

f. religious services;

g. educational services;

h. art and entertainment services;

i. broadcasting services which are not used for advertising;

j. public transportation on land and water and domestic air transport that is an integral part of international air transport;

k. manpower services;

l. hotel services;

m. public services provided by the government;

n. parking area services;

o. public telephone services using coins;

p. remittance services by money orders; and

q. food or catering services.

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