Indonesia Investments·4 min read·hard
Indonesia Tax Reform: World Bank Urges Indonesia to Cut VAT Threshold to Rp 500M
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Indonesia Investments
✦AI Summary
The World Bank has recommended that Indonesia lower its VAT registration threshold from IDR 4.8 billion to IDR 500 million to improve tax collection. The current high threshold is blamed for creating structural distortions and limiting the country's tax-to-GDP ratio.
If adopted, the policy shift would require any business generating at least IDR 500 million in annual turnover to register as a PKP, and thus collect Value-Added Tax (VAT) on sales, and remit the revenue to the state treasury.
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