VAT (PPN) and invoicing in Indonesia (2026): Coretax guide

Indonesia’s VAT is Pajak Pertambahan Nilai (PPN). A registered business, a Pengusaha Kena Pajak (PKP), charges PPN on its sales, credits the PPN on its purchases and pays the difference every month. Luxury goods can also carry a separate luxury sales tax (PPnBM). PPN is administered by the Directorate General of Taxes (Direktorat Jenderal Pajak, DJP) of the Ministry of Finance, and since 1 January 2025 almost everything runs through its new core tax system, Coretax. This guide covers what a small business needs to know in 2026. Figures are as of October 2026.

PPN at a glance: 12% on an 11/12 base

The Harmonisation of Tax Regulations Law (Law No. 7 of 2021) raised PPN to 11% from 1 April 2022 and to 12% from 1 January 2025. Ministry of Finance Regulation PMK 131 of 2024 then decided how the 12% applies:

Some goods and services are exempt or not subject to PPN, and some sectors use special tax bases or fixed rates set by separate regulations. The law allows the government to set the rate anywhere between 5% and 15% by government regulation, after consulting the House of Representatives.

Who must register as a PKP

• Registration: every business needs a taxpayer number (NPWP). Resident individuals use their 16-digit national identity number (NIK) as their NPWP.
• The IDR 4.8 billion threshold: a “small entrepreneur” with gross turnover of up to IDR 4.8 billion in a book year does not have to charge PPN (PMK 197/PMK.03/2013). Once turnover passes that amount, you must report your business for confirmation as a PKP by the end of that book year, and as a PKP you charge PPN on your taxable supplies.
• Voluntary PKP: a small entrepreneur may choose to be confirmed as a PKP (Article 3A of the VAT Law). That makes sense if you sell mostly to other PKPs, who can credit the PPN you charge, and you want to credit the PPN on your own purchases.

Becoming a PKP late does not wipe out the past: if the tax office finds that you should have been a PKP earlier, it can assess the PPN you should have collected since then.

Returns and payment

• Tax period: one calendar month.
• Payment: the PPN for a month must be paid by the end of the following month and before you file the return.
• Return: the monthly VAT return (SPT Masa PPN) is filed electronically, by the end of the following month.
• Late filing: a fine of IDR 500,000 for each late VAT return.
• Late payment: interest at the monthly rate set by the Minister of Finance plus a surcharge, for up to 24 months; part of a month counts as a full month.

Tax invoices (faktur pajak)

A faktur pajak is the proof that you collected PPN, and your customer needs it to credit the tax.

When to issue it (Article 13 of the VAT Law):

• when you deliver the goods or services,
• when you receive payment, if payment comes before delivery,
• when you receive a progress payment for part of a job, or
• at another time set by the Minister of Finance.

You may issue one combined faktur (faktur pajak gabungan) for all supplies to the same customer during a calendar month.

What it must show (Article 13(5)):

1. 1the name, address and NPWP of the seller,
2. 2the name, address and NPWP of the buyer,
3. 3the type of goods or services, the selling price and any discount,
4. 4the PPN collected,
5. 5the PPnBM collected, if any,
6. 6the code, serial number and date of the faktur, and
7. 7the name and signature of the person authorised to sign it.

Corrections: you do not change an approved faktur. If it is wrong or incomplete, you issue a replacement faktur (faktur pajak pengganti); if the transaction is cancelled, you cancel the faktur; for goods returned, the buyer issues a return note (nota retur).

Records: books, records and supporting documents, including those kept electronically or online, must be kept for 10 years in Indonesia (Article 28(11) of the General Tax Provisions Law). Keeping your books in a foreign language or a currency other than rupiah needs permission from the Minister of Finance.

e-Faktur in Coretax

Indonesia already requires electronic tax invoices. Under PMK 81 of 2024, which brought in the Coretax core tax administration system from 1 January 2025:

• each faktur must be uploaded through the Taxpayer Portal (or a page integrated with DJP’s system) and approved by DJP,
• a faktur that is not approved is not a faktur: the PPN on it cannot be credited by the buyer, and the seller can be penalised,
• registration, PKP confirmation, payments, returns and refunds also run through Coretax, with tax documents in electronic form and the NPWP as the single taxpayer identity.

You can create fakturs directly in Coretax or through software that DJP has connected to its system; ordinary invoicing software cannot issue an approved faktur on its own.

Worked example in rupiah

A PKP that sells office furniture (not a luxury good) has this month:

PPN payable: Rp11,000,000 output tax minus Rp6,600,000 input tax = Rp4,400,000, paid by the end of the next month and before the return is filed. The result is the same as charging 11% on the price.

Common mistakes

1. 1Charging 12% on the full price of ordinary goods or services, instead of 12% on the 11/12 base.
2. 2Missing the IDR 4.8 billion threshold and becoming a PKP late, then owing the PPN you did not collect.
3. 3Treating an unapproved faktur as valid. Until DJP approves it in Coretax, it is not a faktur.
4. 4Wrong buyer details, especially the NPWP, which can stop your customer from crediting the tax.
5. 5Filing the return before paying, or paying after the end of the following month.
6. 6Throwing records away too early: the retention period is 10 years.

How Clientlly helps

Clientlly numbers your invoices sequentially per series and puts Indonesia’s PPN rate on every invoice, with credit notes linked to the original invoice. You can invoice export customers in multiple currencies, send the PDF in your client’s language with a card payment link, see when it was opened and let automatic reminders go out 3, 14 and 30 days after the due date. Scanned receipts have the tax read automatically, sales and purchase tax books are kept per rate, including exports, and tax reports with Excel and PDF exports are ready for you and your tax consultant. See invoicing and accounting.

Clientlly is not connected to Coretax and does not create or upload faktur pajak. Issue your fakturs in Coretax or through a solution integrated with DJP’s system, and use Clientlly for your customers, payments and books.