In early 2025, the public was confused: did VAT go up to 12% or not? The answer lies in MoF Regulation 131/2024, effective since January 1, 2025, and still the basis for VAT calculations today. The core idea is simple, but getting it right on tax invoices requires care.
Two regimes under one rate
The statutory VAT rate remains 12%. What differs is the Tax Base (DPP) used to calculate it:
| TYPE OF SUPPLY | FORMULA | EFFECTIVE BURDEN |
|---|---|---|
| Luxury goods (subject to Luxury Sales Tax: certain motor vehicles, luxury residences ≥ Rp30B, aircraft, yachts, hot-air balloons, firearm ammunition) | 12% × selling price / import value | 12% |
| General goods & services (all other supplies) | 12% × (11/12 × selling price) | 11% |
| Staple goods, healthcare, education services | VAT-exempt / not collected | — |
Worked example
Suppose you sell an interior design service (not a luxury good) worth Rp100,000,000:
- Alternative Tax Base = 11/12 × Rp100,000,000 = Rp91,666,667
- VAT payable = 12% × Rp91,666,667 = Rp11,000,000
- Effective burden = Rp11,000,000 ÷ Rp100,000,000 = 11% — the same as before 2025.
Compare this with selling a luxury car subject to Luxury Sales Tax worth Rp1 billion: VAT is straightforwardly 12% × Rp1,000,000,000 = Rp120,000,000 (excluding the Luxury Sales Tax itself).
What about existing alternative tax bases?
Several transaction types have long used their own alternative tax base or fixed amount — for example, parcel delivery services, freight forwarding, and insurance agent services. These are excluded from the mechanism under Articles 2 and 3 of MoF Reg. 131/2024. The government later issued MoF Regulation 11/2025 as an "omnibus" rule consolidating Alternative Tax Base and Fixed Amount schemes under one legal basis, with harmonized calculation patterns (12% × 11/12 × DPP, and other specific formulas).
Practical implications for your business
- Make sure your invoicing system is correct. Coretax and the latest e-Faktur version already automate the 11/12 tax base for general goods — but still verify the goods/service category you enter.
- Separate your luxury goods catalog. If you sell a mix (e.g., a vehicle dealership), make sure Luxury Sales Tax items are correctly mapped so the formulas aren't swapped.
- Check input tax invoices from suppliers. Incorrectly based input invoices risk being challenged during crediting.
- Prepare turnover reconciliation. A difference between commercial turnover and the 11/12 tax base on your VAT return is normal — but it must be explainable with proper working papers during an audit.
Non-PKP MSMEs: no obligation to collect
Remember: businesses with annual turnover below Rp4.8 billion that haven't been confirmed as a Taxable Entrepreneur (PKP) are not required to collect VAT at all. The 11% vs 12% discussion only becomes relevant once you're a PKP — whether because you crossed the turnover threshold or chose to register voluntarily.
Disclaimer: This article was prepared as general information as of June 18, 2026 and does not constitute tax advice for any specific case. Tax regulations are subject to change. For guidance on your specific business situation, please consult the Sentary Consulting team or a registered tax consultant.