Indonesia applies the 12% VAT rate in full only to luxury goods under PMK 131/2024, from 1 January 2025

What changed in detail

Minister of Finance Regulation (PMK) No. 131 of 2024 sets the VAT treatment of imports and supplies of goods and services, and of goods and services used from outside the customs area, at the 12% rate set by the Harmonised Tax Law (UU HPP). It was set and promulgated on 31 December 2024 (Berita Negara 2024 No. 1065) and came into force on 1 January 2025 (Article 6).

The regulation splits the tax base in two:

• Luxury goods (Article 2). For goods subject to luxury-goods sales tax (PPnBM), both motor vehicles and other goods, VAT is 12% of the selling price or import value.
• Everything else (Article 3). For all other taxable goods and services, VAT is 12% of an “other value” (nilai lain) base equal to 11/12 of the import value, selling price or consideration. The effective burden is 11%.

Article 4 excludes supplies already taxed under their own nilai-lain or fixed-rate (besaran tertentu) rules.

Article 5 sets a transition for luxury goods sold to final consumers:

• From 1 to 31 January 2025, VAT is 12% of the 11/12 base.
• From 1 February 2025, it is 12% of the full selling price.

What it means

The headline rate rose to 12%, but for almost every supply the VAT charged stayed at 11% in practice. Invoices show 12% applied to a base of 11/12. Only PPnBM-liable luxury goods bear the full 12%. The items excluded by Article 4 were restated for the 12% rate a month later in PMK 11/2025 (id-ppn-dpp-nilai-lain-pmk11-2025). That regulation sits alongside this one and does not replace it. The January 2025 transition for luxury goods is spent. The rest of PMK 131/2024 remains the basis of Indonesia’s 12% rate, with no later amendment in this record set as of November 2026. A system that simply multiplies the price by 12% will overcharge on ordinary supplies.