🅿️ VAT in Indonesia is about to increase from 11% to 12% in 2025 📈 and that might sound small—but for businesses, tourists, and long-term expats in Bali, the impact can be much bigger than expected.
🅰️ Higher VAT means more expensive goods and services—especially in hospitality, dining, retail, and professional services 🛍️🍽️ For foreigners living in or visiting Bali, this change could affect daily spending, rental costs, and even business pricing strategies.
🆂 The good news? You still have time to prepare 💡 Whether you’re running a business or just managing your personal budget, understanding how the new VAT rate works and adjusting your plans now will help you avoid surprises in 2025.
🆃 “When VAT increased last time, we didn’t update our prices fast enough,” says Clara, a villa manager in Canggu. “It cut into our profit margins until Legal Indonesia helped us restructure everything.” 💬
🅴 For instance, many businesses forget that VAT applies to digital services and professional fees as well 💻⚖️ If you’re an expat freelancer, restaurant owner, or property investor, these areas need review before the hike hits.
🅰 Want to stay ahead of Indonesia’s VAT increase? 📊 Start reviewing your invoices, contracts, and pricing now—with a legal advisor if needed. It’s better to adapt early than deal with tax headaches later!
Table of Contents
- How Will Indonesia’s VAT Hike Affect Foreigners Living in Bali? 💸
- What Goods and Services Are Impacted by the New 12% VAT? 🛍️
- Can Tourists and Expats Expect Higher Prices in 2025? 🧳
- How Should Bali Businesses Adjust Their Pricing and Invoices? 🧾
- Are Digital Nomads and Freelancers in Indonesia Affected Too? 💻
- What Legal Steps Can You Take to Stay Tax Compliant in Bali? ⚖️
- When Exactly Does the VAT Increase Take Effect, and How to Prepare? 📅
- FAQs About Indonesia’s 12% VAT Rule and Its Impact on Expats ❓
How Will Indonesia’s VAT Hike Affect Foreigners Living in Bali? 💸
The jump from 11% to 12% might seem small, but it adds up—especially for expats living long-term in Bali.
Things like laundry, gym memberships, tuition, and legal fees will all get slightly more expensive.
If you own a business, this change could reduce your profit margins unless you update your pricing now.
What Goods and Services Are Impacted by the New 12% VAT? 🛍️
Most goods and services are subject to VAT—dining out, shopping, digital subscriptions, salon visits, and even legal or architecture fees.
If you run a business, it’s time to update your invoices, price lists, and any printed materials to reflect the new rate before 2025 arrives.
Can Tourists and Expats Expect Higher Prices in 2025? 🧳
Yes. Tourists and long-term residents will feel the impact. Hotel rates, spa packages, airport transfers, meals, and tours are all expected to go up.
If you’re booking villas or hiring drivers, check if prices already include VAT so you’re not caught off guard.
How Should Bali Businesses Adjust Their Pricing and Invoices? 🧾
Businesses in Bali—especially restaurants, cafes, hotels, and service providers—should update all invoices, e-Faktur entries, contracts, menus, and price displays.
Train your staff and inform your customers early. Don’t wait until January to make changes—errors in tax reporting could lead to fines.
Are Digital Nomads and Freelancers in Indonesia Affected Too? 💻
Yes, especially if you have local clients and operate under a business entity like a PT PMA. You’ll need to reflect the new 12% rate in your invoices and monthly VAT reports.
Even if your clients are abroad, your local expenses like coworking spaces or internet bills will also increase under the new VAT.
What Legal Steps Can You Take to Stay Tax Compliant in Bali? ⚖️
Make sure you have an active tax ID (NPWP), know your VAT obligations, and issue the correct invoices. Review your contracts—do they include VAT, or is it separate?
A legal or tax consultant can help you review everything now so you’re not scrambling at year-end.
When Exactly Does the VAT Increase Take Effect, and How to Prepare? 📅
The new VAT rate starts on January 1, 2025. That means you have until the end of 2024 to prepare.
Update your systems, notify your clients, and revise contracts as needed. It’s better to adjust early than deal with tax mistakes and corrections later on.
FAQs About Indonesia’s 12% VAT Rule and Its Impact on Expats ❓
-
Will everything in Bali suddenly cost more in 2025?
Yes, most taxable goods and services will go up by at least 1%.
-
Do foreigners have to file VAT reports too?
Only if you’re registered as a business or collecting VAT from clients.
-
Will villa rentals become more expensive?
Likely yes, especially for short-term rentals that include VAT in the price.
-
Can businesses delay updating their pricing?
No. Failure to apply the 12% rate starting Jan 1 may lead to penalties.
-
I work online—do I need to collect VAT?
If you’re billing Indonesian clients under a registered business, yes.
