Page 2 - Newsletter (VAT on Digital Goods and Services from Overseas and The Resuming of Trial Proceedings and Tax Court Services)

DDTC Newsletter Vol.03 | No.11 I May 2020 Page 2 of 7

VAT on Digital Goods and Services from Overseas and
The Resuming of Trial Proceedings and Tax Court Services

VAT for the Utilization of Intangible use or right to use copyright in the field of literature,
Taxable Goods and/or Taxable art or scientific work, patents, designs or models,
Services from Overseas Through plans, secret formulas or processes, trademarks, or
forms of intellectual/industrial property rights or
PMSE other similar rights.

The government has issued a regulation on the Second, the use or right to use industrial, commercial,
imposition of Value Added Tax (VAT) on intangible or scientific tools/equipment. Third, the use of
taxable goods (Barang Kena Pajak/BKP) and taxable knowledge or information in the scientific, technical,
services (Jasa Kena Pajak/JKP) from outside the industrial, or commercial sectors. Fourth, the use of
customs area (overseas) which are carried out via additional or complementary assistance in relation to
Trade Through Electronic Systems (Perdagangan the use of the aforementioned rights.
Melalui Sistem Elektronik/PMSE). Fifth, the use or right to use motion picture films, films,

The abovementioned regulation refers to the or videotapes for television broadcasts, or sound
Minister of Finance Regulation No. 48/PMK.03/2020 tapes for radio broadcasts. Sixth, the acquisition of all
concerning Procedures for the Appointment of or part of rights that relate to the use or granting of
Withholders, Withholding and Deposit, and Reporting intellectual/industrial property rights or other rights.
of Value Added Tax on the Utilization of Intangible Seventh, the use of digital goods.
Taxable Goods and/or Taxable Services from Outside
This regulation defines digital goods as any intangible
the Customs Area within the Customs Area through goods in the form of electronic or digital information,
Trade through Electronic Systems (MoF Reg. 48/2020). including goods that are the result of conversion or
Promulgated on 5 May 2020, this regulation will come goods that are in electronic form, including but not
into force on 1 July 2020 and implement the provisions limited to software, multimedia, and/or electronic
of Article 6 paragraph (13) point a of Government data. On another note, the utilization of digital services
Regulation in Lieu of Law No. 1 of 2020 concerning from abroad will be subject to VAT.
State Financial Policies and Financial System Stability Further, PMSE business players to be appointed as
to Address the Corona Virus Disease (Covid-19) PMSE VAT withholders are those whose transactions
Pandemic and/or to Counter Threats that Endanger with buyers of goods and/or recipients of services in
the National Economy and/or Financial System Indonesia exceed a certain amount within 12 months.
Stability (Perppu No. 1/2020) which mandates the
Moreover, another criterion that may also be used to
imposition of VAT on PMSE activities.
determine the appointment of a PMSE business player
VAT on the utilization of intangible BKP and/or JKP as a PPN PMSE withholder by the Minister of Finance
from outside the customs area shall be withheld, is the amount of traffic or access exceeding a certain
deposited, and reported by PMSE business players amount within 12 months.
appointed by the Minister of Finance as withholders. A
The amount of transaction and traffic or access will be
PMSE business player refers to an individual or entity
stipulated by the Director General of Taxes. Likewise,
conducting business in the PMSE sector.
the authority to appoint a PMSE VAT withholder
PMSE business players may take the form of foreign will be delegated from the Minister of Finance to the
traders, overseas service providers, foreign PMSE
Director General of Taxes. The appointment as a PMSE
providers (PPMSE), and/or domestic PPMSE. PPMSE VAT withholder will take effect as of the beginning of
refers to a business player that provides electronic the following month after the date of the appointment
communication facilities used for trade transactions. decree.
Foreign traders or service providers, on the other hand, PMSE business players appointed as withholders will
are individuals or entities that reside or domiciled be given an identification number as a means of tax
outside customs areas that carry out transactions administration. Moreover, PMSE business players
with buyers within customs areas through electronic that meet the criteria but have not been appointed as
systems. PMSE VAT withholders may submit a notification to

In further detail, the utilization of intangible BKP from the Director General of Taxes to be appointed as PMSE
outside the customs area through the PMSE on which VAT withholders.
VAT is imposed is categorized into 7 types. First, the