The transaction code consists of only two digits at the beginning of the tax invoice serial number. Its size may be small, but those two digits determine whether your invoice is considered compliant and who bears the consequences if there is an error.
Why these two digits are binding
Article 13 paragraph (5) of the VAT Law states that the code, serial number, and date of issuance of the tax invoice are mandatory information that must be included. Thus, the transaction code is not merely an administrative complement, but rather a part of the formal requirements of the invoice.
PER-1/PJ/2025 reinforces this. Article 2 paragraph (2) requires that tax invoices be filled out correctly, completely, and clearly. The term "correct" is often overlooked: an invoice with all fields neatly filled out but with an incorrect code still does not meet the requirements.
Two consequences, neither of which falls on the same party
An incomplete tax invoice brings two separate consequences:
- The seller is subject to an administrative sanction in the form of a fine of 1 percent of the Tax Base, based on Article 14 of the General Provisions and Tax Procedures Law (Undang-Undang KUP).
- The buyer cannot credit the input tax stated in the invoice.
This second aspect makes this issue not just an internal matter for the seller. The buyer bears the loss for a mistake they did not make, which is usually only discovered during reconciliation or audits, long after the transaction has occurred.
The most common mistake is not the meaning, but the order
Most people memorize the meaning of each code. What can be tricky are transactions that fall into more than one category simultaneously. For this, there is a priority order, and the Directorate General of Taxes has previously explained it as a series of questions, from highest to lowest:
- Is this delivery exempt from tax or covered by the government (07), or is it exempt from imposition (08)?
- If not, is the delivery to a government agency that collects VAT (02) or to another VAT collector (03)?
- If not, does it fall under other deliveries (06)?
- If not, does it use a different Tax Base (04), a specific amount (05), or assets under Article 16D (09)?
- If none of these apply, then use code 01.
The practical consequence is that deliveries with facilities to government agencies still use 07 or 08, not 02, because the facility is on a higher tier. Conversely, deliveries to the treasurer of a government agency where VAT is collected at a specific amount still use 02, not 05.
Code 10 has not yet entered many old records
The explanation of the order above was published in 2022, when the transaction codes numbered nine. After that, there was an addition that you need to note.
PER-1/PJ/2025, the technical guidelines for issuing tax invoices for the PMK 131 of 2024 scheme, includes examples of the application of transaction codes, directing deliveries that use rates other than the rate under Article 7 paragraph (1) of the VAT Law to code 10. Previously, such cases were commonly recorded as part of code 06.
The same regulation provides other examples that often trigger doubts:
- Taxable goods classified as luxury with a Tax Base equal to the full selling price use code 01.
- Taxable goods other than those classified as luxury, with a Tax Base of 11/12 of the selling price, use code 04.
- Deliveries to entrepreneurs in Bonded Zones that receive tax exemption use code 07, even though the VAT calculation still uses the value of 11/12.
The third example reinforces the earlier priority rule: the Tax Base used does not shift the code, as long as a facility applies.
If your compliance records still mention nine transaction codes, that record deserves to be re-examined.
Three factors that determine the code
Before touching any monetary figures, check in order: whether there is a VAT facility on that delivery, the status of the counterparty as a collector or not, and then the Tax Base used. The order of examination follows the priority order, not the order of columns on the screen.
This topic is among those discussed by Ikhwan Catur Rahmawan in the CoreTax Understanding class. If you prefer to see the explanation directly, there is a short clip.
Sources
- PER-1/PJ/2025 on Technical Guidelines for Issuing Tax Invoices in the Context of Implementing PMK 131 of 2024, Directorate General of Taxes
- Tax Invoice Transaction Codes, Recognize Types and When to Use Them, Directorate General of Taxes
- Pay Attention to the Compliance of Tax Invoices, Be Careful of a 1% DPP Fine, DDTCNews
- PER-11/PJ/2025, status in effect, JDIH Ministry of Finance