E-Commerce VAT Collector: Are You The One?
By: Destiny Wulandari, employee of the Directorate General of Taxes
Since July 1, 2020, Indonesian Government has been applying Value-Added Tax (VAT) to sales of digital goods and services provided by foreign businesses to customers in Indonesia through series of electronic devices and procedures.
The examples of these products include but are not limited to downloading or streaming of apps, books, computer software, games, magazines, movies, music, and newspapers, as well as the subscription of such products. Online services such as advertising, design, marketing, video conferencing services, and its kinds are also the examples of digital products covered by this measure.
What Kind of Digital Goods and/or Services Providers Meet The Definition?
Sellers of digital products who may be appointed as E-Commerce VAT Collector include:
- overseas merchants or online retailers who sell digital products to Indonesian customers;
- overseas operators of online marketplaces who supplies digital products to Indonesian customers; and
- Indonesian operators of online marketplaces who supply foreign digital products to Indonesian customers.
Who Will Be Considered as Indonesian Customers?
A customer will be considered as Indonesian customer if the customer:
- provides an Indonesian billing address or mailing address for his account with the seller;
- uses payment facilities such as credit or debit cards issued by Indonesian financial institutions; and/or
- places orders using Indonesian IP addresses or country calling code.
E-Commerce VAT Appointment Threshold
The criteria to be appointed as VAT collectors are:
- the value of transactions with Indonesian customers exceeds IDR 600,000,000.00 in 1 year or IDR 50,000,000.00 in 1 month; and/or
- the amount of traffic or access by Indonesian customers exceeds 12,000 in 1 year or 1,000 in 1 month.
VAT Collector’s Obligations
Overseas businesses that make sales like those described above to Indonesian customers and meet the threshold will be appointed as VAT collectors by Indonesian Government and be responsible for:
- charging VAT on sales of digital products to Indonesian consumers. It begins from the first day of the next month following the appointment as the VAT collector;
- the applicable VAT rate is 11 percent of the pre-tax amount. It will be 12 percent no later than January 1, 2025 (there will be further announcement for VAT rate change);
- making monthly remittance to Indonesian Government and received by Indonesian Government by the end of the following month; and
- filing quarterly VAT return by the end of the next month following the end of the quarter.
In special cases, General Director of Taxes may require the appointed VAT collector to provide a more detailed report covering one calendar year period.
Registration To Be Appointed as E-Commerce VAT Collector
To be appointed as E-Commerce VAT Collector, there are two ways as follows:
- visit digitaltax.pajak.go.id; or
- send a notification letter to be appointed by email to email@example.com.
The registration guidance at Digital Tax Portal and the notification letter template are available at bit.ly/IndonesiaE-CommerceVAT.
The appointed E-Commerce VAT Collector will be registered in Permanent Establishments and Expatriates Tax Office administratively and will be sent an appointment decree, tax identification card, and certificate of registration by email.
Brief information about E-Commerce VAT Collector Appointment Procedure can be accessed from @pajakbadora Instagram Highlight.
- Minister of Finance Regulation Number 60/PMK.03/2022
- Director General of Taxes Regulation Number PER-12/PJ/2020