To ensure that all digital product and service providers, whether foreign or Indonesian, are operating on the same playing field, the Ministry of Finance has issued new regulations relating to tax on foreign digital products and services.* These Regulations took effect on 1 July 2020.

The new Regulations impose a 10% VAT on all goods and services sold online in Indonesia from outside Indonesia. The Regulations cover goods and services such as entertainment streaming services, gaming and online magazines. Generally, the Regulations require VAT to be collected and provided to the Ministry of Finance by the supplier of the goods and services.

To become VAT collectors, E-Commerce must met the following criteria:

• the value of the goods or services sold in Indonesia exceeds IDR 600 million in any 12 month period or IDR 50 million in any one month period; or
• the traffic/access to the site exceeds 12, 000 in any 12 month period or 1000 in any one month period.

If they met the criteria, the Tax Office will then issued Tax Identity Number to identify Business Entities as VAT collectors.

* Regulation of The Minister for Finance of the Republic of Indonesia Number 48/PMK.03/2020 concerning the Procedures for the Appointment of the Collectors, Collection, Remittance, and Filing of Value Added Tax on the Use of Intangible Taxable Goods and/or Taxable Services from Outside of the Customs and Excises Territory within the Customs and Excises Territory through Electronic Commerce.

** Regulation of the Director General of Taxes No. PER-12/PJ/2020 on the Thresholds for Collectors and the Appointment of Collectors and in relation to Collection, Remittance, and the Filing of Value Added Tax for Intangible Taxable Goods and/or Taxable Services provided by e-commerce within Indonesia from Outside of The Customs and Excises Territory.