Taxation KBLI 47721 Risk Medium

Pharmacy & Pharmaceutical Tax

Pharmacies and pharmaceutical industries face complex VAT regulations: medicines are VAT-exempt when provided as part of medical services, but subject to VAT when sold retail. Additionally, the pharmaceutical industry collects Article 22 Income Tax on product sales. Arunika Consulting helps pharmacies and pharmaceutical distributors understand different tax obligations for each transaction type.

Tax Rate

11%

PPN

Risk Level

Medium

Typical Turnover

IDR 500 million - 20 Billion per year

Tax Challenges

Medicine VAT: Exempt vs Taxable

Medicines provided as part of medical services are VAT-exempt, but medicines sold directly (OTC) are subject to 11% VAT.

Article 22 Income Tax for Pharmaceutical Industry

Pharmacies purchasing from pharmaceutical industries are subject to Article 22 Income Tax collection that must be credited in the Annual Tax Return.

Limited Profit Margin

Maximum Retail Price (HET) for government program medicines limits margins, while tax obligations remain.

Our Tax Solutions

1

VAT Transaction Separation

Developing a recording system that separates medicine sales through prescriptions (medical services) from over-the-counter sales (OTC).

  • Accurate VAT
  • Compliance maintained
  • Clean audit trail
2

Article 22 Income Tax Reconciliation

Tracking all Article 22 Income Tax collection proofs from pharmaceutical suppliers to be credited in the Annual Tax Return.

  • Complete tax credits
  • No overpayment left behind
  • Organized documentation
3

Input VAT Optimization

Ensuring all Input VAT from medicine purchases and operations can be credited.

  • Minimal VAT burden
  • Good cash flow
  • Optimal tax position

Related Tax Regulations

PMK-83/2023

VAT on Medicine Sales

VAT provisions for medicines including government-borne VAT (DTP) for specific programs.

PPh Pasal 22

Article 22 Income Tax Collection by Pharmaceutical Industry

Pharmaceutical industry as Article 22 tax collector with 0.3% rate on medicine sales.

PP 49/2022

VAT Exemption on Health Services

Medicines provided as part of medical services may be exempt from VAT under certain conditions.

Need a Tax Consultant for Pharmacy & Pharmaceutical Tax?

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Pharmacy & Pharmaceutical Tax Consulting Services Across Indonesia

We support clients in major Indonesian cities. Find a location-specific service page for your area.

Bali

Banten

DKI Jakarta

Daerah Istimewa Yogyakarta

Jawa Barat

Jawa Tengah

Jawa Timur

Kalimantan Barat

Kalimantan Selatan

Kalimantan Timur

Kepulauan Riau

Riau

Sulawesi Selatan

Sulawesi Tengah

Sulawesi Tenggara

Sulawesi Utara

Sumatera Utara

Sumatra Selatan

Frequently Asked Questions

Are all medicines subject to VAT?

No. Medicines provided as part of medical services (doctor prescriptions at clinics/hospitals) are VAT-exempt. OTC medicines sold retail are subject to 11% VAT.

What is government-borne medicine VAT?

Certain medicines in government programs (vaccines, subsidized generic medicines) have Government-Borne VAT so pharmacies do not collect it.

What if a pharmacy is not yet a Taxable Entrepreneur (PKP)?

Pharmacies with turnover below IDR 4.8 Billion may choose not to become PKP. However, they cannot issue tax invoices and Input VAT cannot be credited.

Is Arunika Consulting officially licensed as a tax consultant?

Yes. We are registered tax consultants and support clients with compliant, professional tax advisory and representation.

What should I do if I receive an SP2DK letter or tax audit notice?

Contact us early. We help analyze the risk, prepare supporting documents, draft the response, and assist discussions with the tax office.

How much tax saving can tax planning deliver?

It depends on your structure and transactions. We identify legal efficiencies, incentives, and reporting improvements without crossing into tax evasion.

Related Industries

Pharmacy & Pharmaceutical Tax

KBLI 47721

Pharmacy and pharmaceutical tax: medicine VAT, Article 22 Income Tax, government-borne medicines. Pharmaceutical tax consultation with Arunika Consulting.

Clinic & Medical Practice Tax

KBLI 86201

Clinic and doctor practice tax: VAT exempt, SME Final Tax, Article 21 doctor tax. Health tax consultation with Arunika.

Retail & SME Store Tax

KBLI 47111

Retail store and SME tax: 0.5% Final Tax, PKP obligations, goods VAT. Retail tax consultation with Arunika Consulting.