Update COVID-19 in Indonesia: 497,668 confirmed infections, 15,884 deaths (23 November 2020)
23 November 2020 (closed)
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It is something the central government of Indonesia has been planning and weighing for several years now, but the coronavirus (COVID-19) crisis seems to have sped up the efforts. Per 1 July 2020, the Indonesian government imposes a 10 percent value-added tax (VAT) on sales of imported digital products and services.
The new VAT was introduced through Finance Ministry Regulation No. 48/PMK.03/2020 on the Procedures to Appoint Collectors, Collection as well as Reporting of Value-Added Tax on the Utilization of Taxable Non-Tangible Products and/or Services from Outside the Customs Area via Electronic System Trading within the Customs Area.
It is important to emphasize that it involves imported digital products and services that are bought by Indonesian residents through the Internet (online) from foreign (Internet) companies that do not have a legal entity or presence in Indonesia. Hence, the regulation does not cover the micro and small entrepreneurs in Indonesia who sell their (often homemade) snacks and other products or services via social media platforms and/or e-commerce platforms.
For the past couple of years the Indonesian government has been aiming to obtain more tax revenue from the digital economy (especially e-commerce) as this industry has grown hugely over the past decade. As the digital economy is a relatively recent phenomenon, it is not properly regulated in terms of the levying of tax. This applies to both international and domestic digital transactions.
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