Understanding Indonesia’s New VAT Calculations

Indonesia’s valued added tax (“VAT”) rate was by law increased from 11% to 12% in January 2025, but the move did not quite go as planned. A last-minute announcement by President Prabowo Subianto on 31 December 2024 halted the hike for most goods and services. Instead, the 12% rate now applies only to the delivery and import of luxury goods such as private jets, yachts, and luxury cars, with the new rate coming into effect in February 2025. However, the 12% rate still technically stands for other goods and services, but due to a mandatory recalculation, it effectively remains at 11%. Confused? You’re not alone.