Overview

Financing based on sharia principles has grown significantly in Indonesia, with financing provided by sharia banks reaching Rp429.39 trillion as of June 2025, according to data from the Financial Services Authority (Otoritas Jasa Keuangan - “OJK”).[1] Against this backdrop, several tax aspects warrant attention, including the treatment of Income Tax (Pajak Penghasilan - “PPh”) and specific Value Added Tax (Pajak Pertambahan Nilai - “PPN”) in sharia financing transactions in the banking sector, which have characteristics distinct from those of conventional financing.