VAT on electronic transactions in Indonesia.

Indonesia issued further regulations regarding the criteria for VAT collectors and additional implementing rules on electronic transaction VAT

The Indonesian Director General of Tax (DGT) has issued Regulation No. PER-12/PJ/2020 (PER-12) on 25 June 2020 which provides further explanation on the thresholds to be appointed as VAT collector and other detailed provisions on the VAT on electronic transactions.

Earlier this year the Indonesian government issued Government Regulation in Lieu of Law Number 1 of 2020 on State Financial Policy and Financial System Stability for Mitigation of Pandemic Corona Virus Disease 2019 (COVID-19) (Perppu 1/2020) which states that the DGT will collect VAT on electronic transactions in relation to the utilisation of intangible taxable goods and/or taxable services from outside Indonesian customs area. This VAT will be collected by the foreign sellers/service providers, foreign marketplace or domestic marketplace. These business players will be appointed as VAT collectors if they exceed the following thresholds:

  1. Transaction with Indonesian customers of more than IDR 600 million in a year or IDR 50 million in a month
  2. Their platform from Indonesia has traffic more than 12,000 users in a year or 1,000 users in a month

DGT will appoint the business players as VAT collectors once the threshold is exceeded, and the appointment will be effective at the beginning of the following month after the date of the appointment. The appointed VAT collector will receive an identification number using the attached template, which will be used to fulfil its tax obligations.

The appointed VAT collectors must collect 10% VAT from the sales amount charged to the customers. On this VAT collected, the VAT collector is required to prepare supporting documents in the form of the commercial invoice, billing, order receipt or similar documents which shows that the VAT has been collected and paid. This supporting document will be treated as a valid tax invoice (Faktur Pajak). It can be claimed as a tax credit by the customers if the document contains the following information:

  1. Name and tax ID of the buyer
  2. Buyer’s email address which is registered on the DGT database

The appointed VAT collectors must remit the collected VAT to the Indonesia State Treasury monthly, latest being the end of the following month. The payment to the State Treasury can be completed electronically via bank or other institutions stipulated on PER-12. This payment will be based on the billing code obtained by the VAT collectors from the DGT billing platform. The VAT payment can be made using IDR based on the tax currency rate, USD or other foreign currencies allowed by the DGT, which has not been further explained in this PER-12. The DGT may issue further regulations on this matter.

If during a tax period the VAT amount paid is less than it should be, the difference must be paid to the State Treasury for the respective period. However, if there is an overpayment in certain tax period, the difference can be compensated to the period where the overpayment is identified.

The VAT collectors are required to submit quarterly reports on VAT collected. This report must consist of the following information:

  1. Number of buyers
  2. Payment amount, excluding VAT collected
  3. VAT amount collected
  4. VAT amount paid to the State Treasury

Upon request from the DGT, VAT collectors must submit a detailed annual report which consists of the following information:

  1. Number and date of VAT collection evidence
  2. Payment amount, excluding VAT collected on each VAT collection evidence
  3. VAT amount on each VAT collection evidence
  4. Buyer’s name and tax ID, in case this information is available
  5. Buyer’s phone number, email address or other ID

These reports can be made in English or Bahasa Indonesia using the currency chosen by the VAT collector. These reports need to be submitted electronically via the DGT platform, and the VAT collector will receive an electronic receipt upon submitting the report.

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