VAT liabilities are typically settled by using an input-output mechanism. A vendor of taxable goods or taxable services must typically charge VAT to the buyer. From the vendor’s perspective, it is an output tax. The buyer has to pay the VAT to the vendor. From the buyer’s perspective, it is an input tax. To the… Read More

Companies and individuals designated as taxable enterprises (Pengusaha Kena Pajak/PKP) are required to report their business activities and settle the VAT liabilities on these every month. VAT is usually to be accounted for on a decentralization basis. As a result, a company carrying out business activities through a number of business units (branches) in the… Read More

General Value Added Tax (VAT) is typically due on events involving the transfer of taxable goods or the provision of taxable services in the Indonesian Customs Area. The taxable events are: a. Deliveries of taxable goods in the Customs Area by an enterprise; b. Import of taxable goods; c. Deliveries of taxable services in the… Read More

Indonesia has principally agreed to sign the InterGovernmental Agreement (IGA) 1 for FATCA compliance purposes.

Indonesia signed this Convention on 7 June 2017 and it provided a list of reservations and notifications on the same date, which are still subject to ratification. In this provisional provision, Indonesia has put 33 tax treaties to be covered by the Convention.

Indonesia signed the Convention on Mutual Administrative Assistance in Tax Matters on 3 November 2011 and ratifiedit on 17 October 2014. Indonesia has also signed Multilateral Competent Authority Agreements on the automatic exchange of: 1. Financial Account Information using the Common Reporting Standard; and 2. Transfer Pricing documentation in the form of Country-by-Country Report.

Double Taxation Agreements Indonesia’s Double Taxation Agreements (DTAs/tax treaties) provide for tax benefits in the form of withholding tax exemptions for service fees and for reduced withholding tax rates on dividends, interest, royalties and branch profits received by tax residents of its treaty partners. Tax exemption on service fees is typically granted only if the… Read More

General Indonesian income tax is collected mainly through a system of withholding taxes. Where a particular item of incomeis subject to withholding tax, the payer is generally held responsible for withholding or collection of the tax. These withholding taxes are commonly referred to using the relevant article of the Income Tax (Pajak Penghasilan/PPh) Law, as… Read More