List of Goods and Services Exempt from 12% VAT in Indonesia Released
Indonesia—The value-added tax (VAT) currently stands at 11% and will be increased to 12% starting next year. This is in accordance with the provisions of Law No. 7 of 2021 on the Harmonization of Tax Regulations (HPP).
Article 7 of the Regulation stipulates that, effective April 1, 2022, the value-added tax rate will be adjusted from the previous 10% to 11%. Starting next year, this rate will increase by another 1 percentage point, reaching 12%. Paragraph 2 of Article 7 further provides: “The value-added tax rate shall be 12%, and shall come into effect no later than January 1, 2025.” However, many goods and services are exempt from the 12% value-added tax. Detailed information on these exempt items is governed by the HPP Law and Ministerial Regulation No. 16 of 2017 issued by the Minister of Finance, which specifies the basic necessities eligible for VAT exemption.
List of goods and services exempt from the 12% value-added tax under Article 4A of the HPP Act:
1. Food and beverages provided at restaurants, hotels, food stalls, eateries, and other similar establishments—including both those consumed on the premises and those consumed off-premises—as well as food and beverages that are subject to local taxes and fees when delivered to catering enterprises or catering service providers, shall be governed by the relevant laws and regulations in the field of local taxation.
2. Currency and gold bars held as part of the national foreign exchange reserves and in securities.
3. Religious Services
4. Arts and entertainment services, including all types of services provided by artists and entertainers that, in accordance with the laws and regulations governing local taxes and local tax jurisdictions, are subject to local taxation;
5. Hotel services, namely the rental of guest rooms or hotel rooms that, in accordance with the provisions of local tax laws and regulations, are subject to local taxes and fees.
6. Parking space services refer to the provision or management of parking spaces by parking space owners or parking space management enterprises, in accordance with the provisions of local tax laws, for the purpose of levying local taxes on users of such parking spaces and collecting such taxes.
7. Services provided by the government in the course of general public administration, including those types of services that, by law, may only be performed by the government in the exercise of its statutory powers.
8. Catering or catering services refer to all activities involving the provision of food and beverage services that, in accordance with the provisions of local tax and fee laws and regulations, are subject to local tax and fee collection.
List of goods exempt from VAT under PMK No. 116/2017:
1. Rice and cereals: hulled, dehulled, polished or unpolished, semi-milled or fully milled, broken, cracked, and salt suitable for sowing
2. Corn: with or without husk, including the outer husk and cracks; seeds are excluded.
3. Sago: sago slurry (sago juice), wheat flour, and a mixture of wheat flour and coarse flour
4. Soybeans: with hulls, whole and cracked, excluding seeds
5. Edible salt: iodized or non-iodized, including salt for culinary use or basic household needs and denatured salt.
6. Meat: Fresh bone-in or boneless meat from livestock and poultry that has not been processed, frozen, acid-cured, refrigerated, salt-cured, marinated, or preserved by any other method.
7. Eggs: Unprocessed, unpreserved, and not cleaned or stored; does not include seeds.
8. Milk: milk that is heated or cooled and contains no added sugar or other ingredients.
9. Fruits: freshly harvested and processed through washing, peeling, sorting, cutting, slicing, grading, drying, and other procedures.
10. Fresh vegetables that have been picked, washed, drained, frozen, stored at low temperature, or chopped
11. Tuberous vegetables: fresh, subjected to washing, peeling, portioning, slicing, cutting, or grading.
12. Fresh spices, dried, not crushed or ground
13. White crystalline sugar for food use, extracted from sugarcane, with no added colorants or flavoring agents.
Reprinted from: Zhejiang One Finance
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