A University of Indonesia study finds that VAT overpayment exposure at some palm oil companies exceeds cash and cash equivalents, highlighting potential implications for corporate liquidity.
PALMOILMAGAZINE, JAKARTA — Indonesia’s palm oil and coal sectors show relatively high exposure to value-added tax (VAT) overpayments compared with the automotive and food and beverage industries, according to a study by the Center for Accounting Development at the University of Indonesia’s Faculty of Economics and Business (PPA FEB UI).
The study analyzed VAT overpayment balances relative to cash and cash equivalents at 16 publicly listed companies over 10 quarters, covering the first quarter of 2024 through the second quarter of 2026.
Also Read: Riau Palm Oil FFB Prices Fall IDR 17.54/kg, 9-Year Trees at IDR 3,976.56
Citing the Indonesian Association of Tax Consultants (IKPI), PalmOilMagazine reported on Sunday (Sept. 20, 2026) that the study, titled Formulation and Implementation of VAT Tax Refunds for Sustainable Economic Growth, was released on Sept. 16.
The researchers found that VAT overpayment exposure was not evenly distributed across companies. Instead, it tended to be concentrated in particular industries and among companies with specific transaction characteristics.
Palm Oil Issuer’s VAT Overpayment Ratio Reaches 157.2%
In the palm oil sector, one listed company recorded an average VAT overpayment-to-cash-and-cash-equivalents ratio of 114.2%. The ratio rose to 157.2% in the second quarter of 2026.
A ratio above 100% means the company’s recorded VAT overpayment asset exceeded its available cash and cash equivalents during the period.
Also Read: Indonesia’s CPO, Palm Oil Derivative Exports Rise 5.49% in January–July 2026
The condition, however, was not uniform across all palm oil companies included in the study. Other issuers recorded considerably lower average ratios of 18.2%, 8.1% and 0.8%.
The findings indicate significant differences in VAT overpayment exposure even among companies operating within the same industry.
In the coal sector, one company recorded an average VAT overpayment-to-cash ratio of 65.6%. In the second quarter of 2026, the ratios among the coal issuers analyzed ranged from 12.7% to 46.4%.
Also Read: CPO Prices Forecast to Stay High Through 2027 on El Niño Risk and Biodiesel Demand
Those levels were higher than the ranges recorded in the automotive and food and beverage sectors. Automotive companies posted VAT overpayment-to-cash ratios ranging from 0% to 15.8%, while the food and beverage sector recorded ratios of between 0% and 5% during the observation period.
VAT Overpayments Linked to Export Characteristics
PPA FEB UI said the high VAT overpayment exposure at some companies was linked to the characteristics of their transactions and sales structures.
One factor is the proportion of sales subject to a 0% VAT rate, including sales by export-oriented companies. Under such circumstances, input VAT can remain creditable while output VAT is relatively limited.
Also Read: Indonesia’s Palm Oil Smallholders: 3 Key Demands to the Government
This difference can result in VAT overpayment balances being recorded in a company’s financial statements.
However, PPA FEB UI cautioned that a large VAT overpayment balance should not automatically be interpreted as the value of a tax refund currently being held up.
The balance may include excess VAT that is still being carried forward and credited against tax liabilities in subsequent tax periods. Some amounts may also relate to claims that remain subject to tax examination.
As a result, 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.
Also Read: WWF-Indonesia and CPOPC Strengthen Sustainable Commodity Supply Chains
UI Study Calls for Risk-Based VAT Refunds
Based on its findings, PPA FEB UI recommends a risk-based approach to VAT refund administration.
Such an approach would consider the characteristics of each business as well as the individual taxpayer’s compliance record. This would prevent refund assessments from being determined solely by the industry in which a company operates.
Also Read: CPOPC and WWF-Indonesia Link Palm Oil Sustainability to Smallholder Income
For the palm oil sector, which has significant export activity, the nature of these transactions is an important factor when assessing VAT overpayment positions and their potential impact on corporate liquidity.
The study ultimately frames VAT refunds not merely as a tax administration issue, but also as a matter of corporate cash-flow and liquidity management. (P2)
