InfoSAWIT, JAKARTA – Indonesia's palm oil sector has recorded relatively high exposure to Value Added Tax (VAT) overpayments compared with the automotive and food and beverage industries, according to a study by the Accounting Development Center of the Faculty of Economics and Business at the University of Indonesia (PPA FEB UI).

The study examined the ratio of VAT overpayments to cash and cash equivalents at 16 publicly listed companies over 10 quarters, covering the period from the first quarter of 2024 to the second quarter of 2026.

As reported by InfoSAWIT, the study, titled Formulation and Implementation of VAT Refunds for Sustainable Economic Growth, was released on September 16, 2026.

Researchers found that VAT overpayment exposure was not evenly distributed among companies. Instead, the exposure tended to be concentrated in particular industries and businesses with specific transaction characteristics.

Palm Oil Issuer's Ratio Reaches 157.2%

Within the palm oil sector, one listed company recorded an average VAT-overpayment-to-cash ratio of 114.2%. The ratio subsequently climbed to 157.2% in the second quarter of 2026.

A ratio above 100% means the company's recorded VAT overpayment assets exceeded the amount of cash and cash equivalents available during the period.

However, the pattern was not uniform across all palm oil companies covered by the study. Other issuers recorded substantially lower average ratios of 18.2%, 8.1% and 0.8%.

The figures indicate that VAT overpayment exposure can differ significantly among companies operating in the same sector.

The coal sector also recorded relatively high exposure. One company posted an average VAT-overpayment-to-cash ratio of 65.6%, while the companies analyzed in the sector recorded ratios ranging from 12.7% to 46.4% in the second quarter of 2026.

By comparison, the automotive sector recorded ratios ranging from zero to 15.8%, while the food and beverage sector ranged from zero to 5% during the study period.

Export Transactions Affect VAT Position

PPA FEB UI linked the high VAT overpayment exposure at some companies to the characteristics of their transactions and sales structures.

One factor considered by the researchers was the proportion of sales subject to a zero-percent VAT rate, including sales generated by export-oriented businesses.

Under such circumstances, input VAT may remain creditable while output VAT is relatively limited. This difference can result in an accumulated VAT overpayment balance on a company's financial statements.

The study, however, emphasized that a large VAT overpayment balance should not automatically be interpreted as the amount of a tax refund currently being held up.

The balance may include excess tax being carried forward into subsequent tax periods. Some amounts may also be related to claims that are still undergoing examination.

Consequently, the ratio of VAT overpayments to cash is more appropriately viewed as an indicator of potential liquidity exposure rather than a direct measure of delayed tax refunds.

Risk-Based Approach Recommended

Based on its findings, PPA FEB UI recommended a risk-based approach to VAT refund administration.

The approach would take into account the characteristics of each business and the taxpayer's individual compliance record, rather than relying solely on the industrial sector in which the company operates.

For the palm oil industry, which has significant export activity, the structure of transactions is an important factor in understanding VAT overpayment positions and their potential implications for corporate liquidity.

The study therefore places VAT refunds within a broader context of tax administration, corporate cash flow and liquidity management. (T2)