The Minister of Finance of Indonesia has issued a new regulation known as MOF Regulation No. 48/PMK.03/2020. The regulation concerning Value Added Tax (VAT) on Imported Digital Products in Indonesia will be fully applicable in August 2020, after the nomination from the Indonesian Government in July 2020.
As such, foreign companies or businesses that sell digital products (goods or services) online or through an electronic system to Indonesian consumers are required to pay for the VAT.
The trade activities covered under this new regulation include streaming, downloading or subscription of books, movies, music, software, applications and the such, as well as online services that may include broadcasting, video conferencing, voice recording, advertising and marketing.
A consumer is considered Indonesian when s/he meets one of the following criteria:
According to the Directorate General on Taxation, the sellers of digital goods and services that fall into the following categories should collect the Indonesian VAT (10% rate):
Furthermore, the sellers should also meet the following requirements:
Taking into account the requirements, the nominated companies that are liable for paying the VAT include Netflix, Amazon Web Services Inc, Google Asia Pacific Pte. Ltd, Google Ireland Ltd, Google LLC and Spotify AB.
The seller may appoint a Representative Party in Indonesia to fulfill this compliance technically. Technical appointment, technical payment and submission will be regulated further.
Violating the regulation will result in the following penalties:
1. General tax penalties that are applicable in Indonesia for late payment and late reporting.
2. Blocked access of online services after the issuance of a warning letter for a particular time, which is to be determined further.
Quarter term is definitive based on calendar, not based on the month where the DBP is starting the compliance:
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