Indonesia to Introduce VAT on Imported Digital Products August 2020
New Regulation to Take Place from August 2020
Indonesia will introduce Value Added Tax (VAT) on imported digital products beginning in August 2020.
This will be applicable to all foreign businesses and companies. If you sell digital products either through electronic systems or online, you may need to pay VAT. This applies to both goods and services.
Consumers in Indonesia are those with:
- A local mailing or billing address
- A debit or credit card from a local Indonesian financial institution
- A customer who places online orders using an Indonesian IP address
Trade Activities Subject to VAT
VAT on imported digital products in Indonesia applies to the following trade activities:
- Subscription (books, software, movies, music, application, etc.)
- Online services (video conferencing, broadcasting, advertising, marketing, voice recording, etc.)
Sellers of the following can collect VAT in Indonesia:
- Foreign online retailers and merchants that sell digital services and goods to local Indonesians.
- Foreign online operators of marketplaces that sell digital services and goods to local Indonesians.
- Indonesian online marketplaces that sell digital services and goods to local Indonesians.
- More than IDR 600 million in sales annually or IDR 50 million monthly.
- The traffic of more than 1,000 monthly or 12,000 annually.
Appointing A Third Party for Tax Compliance
Sellers can appoint a third party to represent the business for tax compliance purposes. This will avoid the possible tax penalties you may incur if any late payment or reporting takes place. Deadlines must be met.
Our team has many years of experience under our belt. Our experience makes us the legal experts and the best consultants you could have on your team. 3E Accounting focuses on one-stop, inclusive services and solutions. We meet all your business needs in every aspect, no matter what your business size.
For more information about our tax compliance services, contact our friendly team today.