Value Added Tax on sales of digital products to Indonesian customers

The Indonesian government issued a new regulation related to the mechanism for collecting Value Added Tax (VAT) on digital products or services provided by overseas sellers to Indonesian customers. Ministry of Finance (MoF) Regulation No. 48/PMK.03/2020 (PMK-48), which came into force 1 July 2020, provides the procedures for VAT collection, payment, and reporting for such transactions.

Appointment of VAT collectors

The Director General of Taxes (DGT) appoints Digital VAT Collectors. These are Digital Business Actors that have met the following criteria:

The value of transactions they have with buyers in Indonesia exceeds Rp 600,000,000 in one year or Rp 50,000,000 in one month; and/or
The amount of web traffic or web access related to their intangible goods and/or services in Indonesia exceeds 12,000 in one year or 1,000 in one month.

Digital Business Actors that have not been appointed Digital VAT Collectors but that choose to collect Digital VAT can submit notification to the DGT that they will act as a Digital VAT Collector.

VAT Payments and reporting

All Digital VAT collected during a month must be paid to the Indonesian government by the payment due date, which is the end of the following month.

Digital VAT Collectors must submit quarterly VAT reports. The due date for each report is the end of the month after the end of the quarter (31 January, 30 April, 31 July, and 31 October).

Digital VAT Collectors are required to charge VAT effective 1 August 2020.

Irwan Kusumanto
ikusumanto@bdo.co.id

Ahmad Taufiq
ataufiq@bdo.co.id