On 29 September 2026, the Directorate General of Taxes issued guidance on the Value Added Tax (VAT) exemption for the first IDR 500 million of turnover, a measure aimed at supporting micro and small enterprises. The clarification addresses the scope of “Pajak yang Tidak Dipungut” (Tax Not Collected) provisions under the prevailing VAT Law and its implementing regulations, detailing eligibility criteria, calculation methods, and reporting obligations for qualifying taxpayers.
Key Takeaways
- Exemption Threshold: Taxable entrepreneurs with annual turnover up to IDR 500 million are exempt from VAT collection on the first IDR 500 million, reducing compliance burden for small businesses.
- Eligibility and Administration: The exemption applies automatically to eligible taxpayers; however, they must still maintain proper bookkeeping and report turnover through the Coretax system to validate eligibility.
- Impact on Input VAT: Taxpayers utilizing this exemption cannot claim input VAT credits related to exempt supplies, requiring careful consideration of business decisions regarding voluntary VAT registration.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement