Pertamina has recently announced price increases for several non-subsidized fuel products, including Pertamax Turbo, Pertamina Dex, and Dexlite. The adjustment reflects rising global crude oil prices and fluctuations in the rupiah against the US dollar.
Some have raised concerns that higher non-subsidized fuel prices could contribute to inflation, particularly affecting food and necessities. However, observers from Bank Indonesia estimate the impact to be relatively limited, at around 0.04%.
Rather than focusing on inflation, this article examines how fuel is taxed in Indonesia, covering both subsidized and non-subsidized fuel.
Broadly speaking, fuel taxation in Indonesia consists of three main components, i.e., income tax, value-added tax (VAT), and a regional levy known as the motor vehicle fuel tax. Each has its own mechanism and role within the broader tax system.
Income Tax on Fuel
From an income tax perspective, fuel sales are subject to Article 22. This is governed by Minister of Finance Regulation Number 34/PMK.010/2017 concerning the Collection of Article 22 Income Tax on Imports and Business Supplies, as amended by Minister of Finance Regulation Number 81 of 2024.
The applicable Article 22 income tax rates are as follows:
| Type of Fuel Transaction | Rate | Tax Base |
| Purchases from Pertamina gas stations or its subsidiaries | 0.25% | Sales value excluding VAT |
| Purchases from non-Pertamina gas stations or its subsidiaries | 0.30% | Sales value excluding VAT |
| Other fuel sales | 0.30% | Sales value excluding VAT |
| Gas fuel | 0.30% | Sales value excluding VAT |
Article 22 income tax on fuel can be either final or non-final, depending on the nature of the transaction and the buyer. For sales to distributors or agents, the tax is final. In other cases, it is non-final and can be credited against the taxpayer’s annual income tax liability.
This structure allows for flexibility while assuring oversight of fuel distribution.
VAT on Fuel
Fuel is generally classified as a taxable good, meaning its sale is subject to VAT under Indonesia’s VAT law (Law of the Republic of Indonesia Number 8 of 1983), as amended by Law of the Republic of Indonesia Number 7 of 2021 concerning the Harmonization of Tax Regulations.
Under Article 4A of the VAT law, fuel and gas are not listed among goods exempt from VAT. As a result, their supply is, in principle, subject to VAT.
That said, certain types of fuel, particularly subsidized fuel, may receive special treatment. In some cases, the VAT is borne by the government as part of broader energy subsidy policies.
The technical aspects of VAT collection in this sector, including subsidy-related mechanisms, are regulated by the Directorate General of Taxes. This indicates the added complexity of tax administration in the energy industry.
Motor Vehicle Fuel Tax
In addition to central taxes, fuel is also subject to a regional tax known as the motor vehicle fuel tax.
This provincial tax is imposed on the use of motor vehicle fuel. It is regulated under Law of the Republic of Indonesia Number 28 of 2009 concerning Regional Taxes and Levies, as amended by Law of the Republic of Indonesia Number 1 of 2022 concerning Financial Relations Between the Central and Regional Government.
The tax applies to the supply of fuel to end consumers or vehicle users. The rates are set as follows:
- a maximum of 10% of the fuel’s selling price (before VAT); and
- for public transportation, up to 50% of the private vehicle rate.
In practical terms, if the rate for private vehicles is 10%, the rate for public vehicles may be set at 5%.
How Indonesia Compares Globally
Compared to many other countries, Indonesia’s fuel tax structure is relatively moderate.
In several jurisdictions, particularly in Europe, fuel taxes are significantly higher and often serve as instruments of environmental policy, including carbon taxation.
In OECD countries, fuel taxation typically includes substantial excise duties alongside VAT, and these revenues often play a pivotal role in funding transportation infrastructure and climate initiatives.
Indonesia has introduced a carbon tax under the Law on Harmonization of Tax Regulations, although its implementation is still pending the issuance of further regulations.
In summary, fuel taxation in Indonesia comprises both central and regional components, including the Article 22 income tax on fuel sales, VAT on fuel as a taxable good, and the motor vehicle fuel tax at the provincial level.
Together, these taxes intend to balance state revenue, energy price stability, and broader social considerations. Looking ahead, further reforms in energy taxation may also support environmental objectives, in line with the global shift toward a low-carbon economy.
Also Read:
https://ideatax.id/articles/updates-to-the-05-msme-final-income-tax-and-its-business-impact
https://ideatax.id/articles/all-you-need-to-know-about-income-tax-on-bond-interest
https://ideatax.id/id/articles/waspada-penonaktifan-akses-faktur-pajak-ketentuan-per-19pj2025
