What is PPN in Indonesia?
PPN (Pajak Pertambahan Nilai) is Indonesia's value added tax — a consumption tax levied on the supply of taxable goods and services within Indonesia. The current standard rate is 11%, administered by the Direktorat Jenderal Pajak (DJP) — the Directorate General of Taxes under Indonesia's Ministry of Finance.
PPN has been part of Indonesia's tax system since 1984, replacing the old Sales Tax (Pajak Penjualan). The original rate was 10% for nearly four decades before the first increase was implemented in 2022. Every business in the supply chain that is a registered taxable entrepreneur (Pengusaha Kena Pajak, or PKP) collects PPN from buyers and can offset it against the PPN paid on their own purchases.
PPN rate history: 10% → 11% → planned 12%
Indonesia maintained a flat 10% PPN rate from 1984 until April 2022. The Harmonization of Tax Regulations Law (UU HPP), passed in October 2021, introduced a phased increase:
- 1 April 2022: Rate increased from 10% to 11%
- January 2025 (planned): Further increase to 12% — but this has been deferred by the government. As of 2026, the rate remains 11%.
The increase to 11% was introduced as part of Indonesia's broader fiscal reform to increase the tax-to-GDP ratio, which at approximately 10–11% remains one of the lowest among major emerging economies. Always verify the current rate at pajak.go.id for the most up-to-date status.
PPN registration threshold
Businesses with annual taxable revenue exceeding IDR 4.8 billion must register as a Pengusaha Kena Pajak (PKP — Taxable Entrepreneur) with the DJP. Once registered, they must:
- Issue valid faktur pajak (tax invoices) for all taxable supplies
- File monthly PPN returns (SPT Masa PPN) by the last day of the following month
- Remit net PPN (output tax minus input tax credits) to the state treasury
Businesses below the IDR 4.8 billion threshold may register voluntarily to be able to claim input PPN credits on their purchases — useful if the business has significant PPN-able expenses.
Zero-rated and exempt supplies
Zero-rated (0% PPN — input credits recoverable):
- Exports of taxable goods
- Export of taxable services and intangible assets
- International freight and transportation services
PPN-exempt (no PPN charged, input credits not recoverable):
- Basic food necessities: rice, corn, sago, soybean, salt, fresh meat, chicken, eggs, fish, vegetables, and fresh fruit
- Healthcare services: hospitals, clinics, doctors, dentists, traditional medicine
- Educational services and vocational training
- Financial services and insurance
- Residential property (land and simple housing units)
- Public transport services
How to calculate 11% PPN in Indonesia
To add PPN to a net price:
- PPN amount = Net price × 0.11
- Total (inc. PPN) = Net price × 1.11
- Example: Rp 5,000,000 (ex-PPN) → PPN = Rp 550,000 → Total = Rp 5,550,000
- Example: Rp 50,000,000 (ex-PPN) → PPN = Rp 5,500,000 → Total = Rp 55,500,000
To remove PPN from a gross (PPN-inclusive) price:
- Net price = Gross price ÷ 1.11
- PPN amount = Gross price − Net price
- Example: Rp 11,100,000 (inc. PPN) → Net = Rp 11,100,000 ÷ 1.11 = Rp 10,000,000. PPN = Rp 1,100,000.
Use the free invoice generator to create professional invoices with PPN applied — set the tax rate to 11%, enter your line items, and download a PDF in seconds.