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Indonesia levies VAT on foreign e-commerce 2020

  • Jul 16, 2019 | Richard Asquith

Indonesia is planning to bring non-resident e-commerce sellers into the VAT net. Legislation is being completed for foreign providers of goods and services online to Indonesian consumer to be obliged to charge local VAT. This may be implemented sometime in 2020.

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 of IDR 4.8billion.  

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.

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.

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VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which this year won International Tax Review's Tax Technology Firm of the Year. Richard qualified as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.
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