Indonesia is a growing hub for global trade, attracting businesses worldwide with its abundant resources and strategic location. For those seeking information about export tax regulations in Indonesia, here’s a clear and concise guide tailored for foreign audiences.
What is Export Tax in Indonesia?
Export tax in Indonesia is a levy imposed on goods and services transported out of the country or delivered to non-residents. While the export of goods is generally zero-rated for Value-Added Tax (VAT), specific duties and regulations may apply, depending on the type of export.
Also read: Indonesia’s Import Tax Regulation: A Complete Guide
Key Features of Indonesia’s Export Tax
Zero-Rated VAT for Exports
According to Indonesian VAT laws, exported goods and services are typically subject to a 0% VAT rate. This policy promotes international competitiveness by ensuring no additional tax burden on exported goods or services.
Examples of zero-rated export services include:
- Freight forwarding services for exported goods.
- Consulting services for projects located outside Indonesia.
- Information technology and R&D services provided to overseas clients.
Tax Rate Adjustments
Starting January 2025, there is a VAT rate adjustment in indonesia. However, this hike will not affect exports as long as they fall under the zero-rated category.
Export Tax Revenue Contribution
Data from the World Bank reveals that taxes on exports accounted for approximately 1.75% of Indonesia’s tax revenue in 2022. This figure underscores the limited but crucial role export taxes play in Indonesia’s economy.
Also read: Understanding Indonesia’s Tax Bracket System (Latest Update)
Example of Export Tax in Indonesia
Consider a company, PT XYZ, exporting handmade crafts to the United States. While the goods themselves are zero-rated for VAT, any services related to preparing the crafts for shipment—such as packaging and freight—may also qualify for 0% VAT if utilized outside Indonesia’s customs area.
On the other hand, intangible goods like copyrights or patents sold to foreign entities are subject to VAT. For instance, if PT XYZ licenses a design to a company in Singapore, VAT would apply, but the rate is zero for export transactions.
Also read: Indonesia Tax Rate for Foreigners: What You Need to Know
Incentives for Exporters
Indonesia has introduced several tax incentives to encourage exports, particularly in industries like manufacturing, technology, and research. These include:
- Free Trade Agreements (FTAs): Lower tariffs on goods exported to partner countries.
- Tax Deductions: Rebates or reductions for businesses engaged in export-oriented activities.
These measures ensure that Indonesia remains competitive in the global market.
Also read: Tax Holiday in Indonesia: A Comprehensive Guide for Foreign Investors
Compliance with Export Tax Regulations
Foreign businesses engaging in exports from Indonesia must adhere to the following:
- Tax Registration: Obtain a Tax Identification Number (NPWP) for transactions.
- Invoice Issuance: Ensure invoices reflect the zero-rated VAT for exports.
- Customs Documentation: Submit accurate records to avoid penalties or delays.
Also read: Progressive Tax in Indonesia: Complete Guide for Expats
Why Understanding Export Tax Matters
Knowing the intricacies of Indonesia’s export tax system is vital for businesses to maximize profitability and maintain compliance. From leveraging zero-rated VAT to taking advantage of tax incentives, understanding these regulations can help you streamline operations and enhance global competitiveness.
Exporting from Indonesia offers immense opportunities, but staying informed about tax regulations is crucial. Hence, partnering with reputable consultants like InvestinAsia’s Indonesia tax consultant and compliance services can simplify your tax management and ensure full compliance with Indonesian tax laws.
Our experienced team of professionals is ready to assist you in every tax matter, such as:
- Accounting and tax reporting services in Indonesia
- Indonesia Payroll Service
- Indonesia LKPM Reporting Service
- Indonesia VAT Taxpayers Registration
Not only that, for those of you who need help to export and import in Indonesia, you can rely on our services for Indonesian import and export number.
