On January 11, 2019, Indonesia’s Minister of Finance issued Regulation No. 210/PMK.010/2018 (the “Regulation”) regarding the tax treatment of transactions occurring on electronic platforms and marketplaces. The Regulation will apply from April 1, 2019.
According to the Regulation, providers of electronic markets include individuals, entities, and permanent establishments (PEs) who reside, are domiciled, or have business activities in the Customs Area, which provides a marketplace platform. Traders are individuals, entities, or PEs who reside, are domiciled, or have business activities in Customs Areas that conduct transactions with buyers using electronic platforms. Service providers are individuals, entities, or PEs that reside, are domiciled, or have business activities within the Customs Area, and that conduct transactions with service recipients through an e-commerce platform.
Traders and service providers must provide their taxpayer identification number to the marketplace platform provider. Service providers or traders who electronically submit taxable goods or services through the platform provider must collect, deposit, and report either VAT payable or VAT and sales tax on luxury goods.
Online sellers that make at least IDR 4.8 billion each year must charge Indonesian VAT to customers at 10%, and remit it to the Indonesian tax authorities. Online sellers must also pay Indonesian income tax at 0.5%, if they are a small or medium-sized business, or a 25% corporate income tax, if they are a big enterprise.
The trader or service provider is required to prepare a tax invoice as proof of VAT collection. The platform provider is required to report the transactions carried out through the marketplace to the Directorate General of Taxes (DGT).
The marketplace platform provider can provide information on e-commerce transactions to the DGT from the following sources:
- Financial services institutions.
- Government agencies, institutions, and associations.
- DGT’s information system.
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