Excess VAT Charges? Here’s How to Get a Refund in Indonesia

Close-up of a VAT invoice showing tax rates and calculations, relevant to excess VAT charges and refunds in Indonesia.

Excess VAT charges can be a frustrating issue for buyers in Indonesia. Mistakes happen when sellers apply the wrong VAT rate, often charging more than the regulated 11%. This issue arose following an initial VAT increase to 12% for all goods and services, which was later overturned by the Minister of Finance Regulation Number 131 of 2024.

Issued on December 31, this regulation clarified that the 12% VAT rate applies only to luxury goods. Fortunately, recent regulations empower buyers to request refunds for overpaid VAT. Understanding your rights and knowing how to navigate the refund process is essential for reclaiming your hard-earned money.

 

How Buyers Can Claim Refunds for Excess VAT Charges

Claiming a refund for excess VAT charges is straightforward, thanks to recent updates that simplify the process for buyers. The Directorate General of Taxes has confirmed that buyers can request refunds if they were mistakenly charged 12% VAT, as outlined in the Director General of Taxes Regulation Number PER-01/PJ/2025, issued on January 3, 2025.

This regulation provides technical guidelines for issuing tax invoices, ensuring a clear process for resolving overcharges. If you’ve been overcharged, start by reviewing your purchase receipts to confirm the incorrect VAT rate. Once identified, contact the seller directly to request a correction or refund. Sellers are obligated to refund the excess VAT or issue a revised invoice under the new guidelines.

According to Suryo Utomo, the Director General of Taxes at the Ministry of Finance, buyers can simply bring their receipts back to the store where the purchase was made and request a refund. “How is it done? This is B to C, business to consumer. So, buyers return with the receipt they have kept,” Suryo clarified.

 

What Sellers Must Do About Overcharged VAT

Sellers play a critical role in ensuring compliance with the updated VAT regulations. The Tax Director emphasized that businesses cannot avoid adapting to the new system, as the final policy on VAT was only officially announced just hours before January 1, 2025. This tight timeline has created challenges for many businesses, particularly in updating their administrative systems.

To ease the transition, the government has provided a three-month period for businesses to adjust their systems. This period allows sellers to align with the new taxable base value, which has caused significant administrative changes. Additionally, there are cases where the tax has already been collected under the incorrect rate. Sellers must proactively address these discrepancies by issuing refunds or correcting invoices to avoid disputes with buyers.

“We will also make it easier by not imposing penalties for delays or errors in issuing invoices,” Suryo stated, highlighting the government’s flexibility to support businesses during this adjustment period. However, sellers are ultimately responsible for ensuring compliance and preventing overcharges in the future

 

Stay Vigilant and Know Your Rights

The implementation of the new VAT regulation marks a significant step towards fairness and accountability in Indonesia’s tax system. Buyers now have a clear path to reclaim overpaid taxes by reviewing receipts, contacting sellers, and requesting corrections or refunds, ensuring their consumer rights are protected. Meanwhile, sellers must prioritize compliance and adapt to the updated rules to avoid future disputes.

The government’s efforts to balance flexibility for businesses with protection for consumers highlight its commitment to a transparent and efficient tax process. By staying informed and proactive, both buyers and sellers can navigate these changes smoothly, fostering a more trustworthy and equitable tax environment for everyone.

 

 

Source: kompas.com, cnn.com, cnbcindonesia.com

Image: Getty Images

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