Page 5 - Newsletter (Changes in The Taxation Provisions of International Trade and Digital Economy)

DDTC Newsletter Vol.01 | No.04 I April 2019 Page 5 of 6

CHANGES IN THE TAXATION PROVISIONS OF INTERNATIONAL TRADE AND
DIGITAL ECONOMY

Table 4 – Types of Taxable Services Subject to a 0% Rate Based on MoF Regulation No. 32/2019

No Categories of Taxable Services Subcategories of Taxable Services

1 Activities with respect to movable property 1. Tolling manufacturing services;
which utilization is outside the customs area. 2. Repair and maintenance services; and
3. Freight forwarding services pertaining to goods for export.
2 Activities with respect to immovable property Construction services which include the assessment, planning, and design of
outside the customs area. construction related to buildings or building plans outside the customs area.
3 Service activities of which the results are 1. Technology and information services, including
supplied to be utilized outside of the customs a. computer system analysis services;
area. b. computer system design services;
c. computer system and/or websites creation services using programming
languages;
d. IT security services;
e. contact center services;
f. technical support services;
g. cloud computing and web hosting services; and
h. content creation services using information technology support.
2. Research and development services;
3. Rental services of transportation equipment in the form of aircraft and/or ships
rentals for international flights or shipping activities
4. Consulting services:
a. business and management consulting services;
b. legal consulting services;
c. architectural and interior design consulting services,
d. human resource consulting services;
e. engineering services;
f. marketing services
g. accounting or bookkeeping services;
h. financial statement audit services; and
i. tax services;
5. services in the form of services of finding sellers of goods in the customs area
for export purposes; and
6. interconnection, satellite operations, and/or communication/data connectivity
services:
a. interconnection services for international calls and/or messages carried out
briefly by domestic telecommunication operators to foreign
telecommunication operators;
b. satellite transmitter and responder (transponder) services carried out by
domestic satellite providers to recipients of services abroad, insofar as the
earth station used by the service recipient is outside the customs area
c. satellite control services carried out by the state for the satellite of foreign
satellite operators, insofar as the controlling earth station used by the
domestic satellite operators is within the customs area; and/or
d. global internet connection services through public or private networks
conducted by domestic network providers to recipients of services abroad.

to a 0% VAT rate in order to retain VAT neutrality and MoF Regulation No. 32/2019 has put forward the
country competitiveness. In fact, the majority of countries principle of the destination principle with the phrase “...
have implemented such policy. The limitation of types of utilized outside the customs area...” concerning the types
taxable service exports which subject to 0% VAT rate as in of taxable services. The destination principle itself is a
the case of Indonesia may result problems in the context of cross-jurisdiction taxation scheme in which goods and/or
international trade. Furthermore, this existing condition services will be taxed where the goods and/or services are
can also lead to the absence of principle of neutrality and utilized. Based on this scheme, exported products will be
destination principle for the implementation of VAT in subject to 0% VAT while imported products will be subject
Indonesia. 5 to VAT with the same rate as domestic product sales. This
is a strong indicator of the government’s efforts to improve
the competitiveness of service exports in Indonesia
5 Darussalam, “Menyoal Kebijakan PPN atas Ekspor Jasa di Indonesia,”Perspektif through taxation policies.
DDTCNews (25 Juni 2018). Internet, can be accessed at: https://news.ddtc.
co.id/menyoal-kebijakan-ppn-atas-ekspor-jasa-di-indonesia-12964.