Indonesia levies VAT on foreign e-commerce 1 August 2020
- Jun 22, 2020 | Richard Asquith
Indonesia is planning to bring non-resident e-commerce sellers into the VAT net from 1 August 2020 - a one month delay on the July plan. Legislation is being completed for foreign providers of goods and services online to Indonesian consumer to be obliged to charge local VAT.
This will bring the country into line with many other Asia Pacific and European countries.The current Indonesian VAT rate is 10%, with a registration threshold is as follows:
- Annual sales of IDR 600million per annum; and / or
- More than 12,000 Indonesian consumers per annum
It is likely that the tax authorities will oblige non-resident sellers to register once they pass this threshold, and charge VAT at the point-of-sale to the Indonesian consumer. The Directorate General of Taxation will provide a unique ID and access to the filing portal. Invoices must be produced and retained for all sales in the case of future audit. Payments of any VAT collected must be remited monthly. Filings of summary returns are due each quarter. In addition, annual transactional-level data are due.
Where the VAT collectors have imposed the VAT and the customers have also paid VAT on a self-assessment basis, the self-assessed VAT can be converted to other tax payments, refunded to customers, regarded as input tax credit or claimed as a deductible expense in the income tax calculation of the customers.
As well as goods, VAT will be due on a range of electronic services. This will include: app’s; download and streaming media; e-books; cloud software; online journal subscriptions; membership fees to online associations; and gambling.
Many countries around the world have been extend indirect taxes to offshore providers. The EU imposed a single VAT return for providers, the Mini One-Stop-Shop, in 2015. New Zealand and Australia have since imposed their Goods and Services Taxes on non-resident digital services. Mexico is also considering a foreign e-services VAT bill for early 2020.