Page 3 - 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 3 of 7

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

Other than the withholder criteria, under this to submit a detailed report on PMSE VAT transactions
regulation, the government stipulates three criteria for each period in one calendar year.
of buyers of goods or recipients of services that are
The detailed transaction report must at least contain
subject to VAT. First, residing or domiciled in Indonesia.
information on the number and date of the VAT
Buyers of goods or recipients of services are considered
withholding slip, the amount of payment, and the
to meet this criterion if their correspondence or billing
amount of VAT withheld. The report must also include
address is situated or located or within the Indonesian the name and taxpayer identification number (Nomor
territory.
Pokok Wajib Pajak/NPWP) of the buyer of goods
Further, buyers of goods or recipients of services are and/or recipient of services in the event that the VAT
considered to reside or domiciled in Indonesia if the withholding slip lists the NPWP of the buyer of goods
country selected upon registration on the website or recipient of services.
and/or available system and/or determined by the
PMSE VAT withholder is Indonesia.
Ratification of Government Regulation
Second, making payments using debit, credit, and/
or other payment facilities provided by institutions in Lieu of Law No. 1/2020 as a Law
in Indonesia. Third, conducting transactions using
The government, together with the House of
Indonesian internet protocol addresses or telephone
Representatives (Dewan Perwakilan Rakyat/DPR)
numbers with Indonesian telephone codes.
has ratified Government Regulation in Lieu of Law
These three criteria are not necessarily accumulative. (Peraturan Pemerintah Pengganti Undang-Undang/
This implies that if one of the criteria is met, the buyers Perppu) No. 1 of 2020 in the DPR plenary meeting.
of goods or recipients of services will be subject to VAT. This ratification is outlined in Law No. 2 of 2020
The applicable VAT rate is 10% of the value of money concerning the Ratification of Government Regulation
without VAT that is paid and withheld upon payment. in Lieu of Law No. 1 of 2020 concerning State Financial
Policies and Financial System Stability to Address the
PMSE VAT withholders must produce VAT withholding
Corona Virus Disease 2019 (Covid-19) Pandemic and/
slip in the form of commercial invoices, billing, order
or to Counter the Threats that Harm the National
receipts, or similar documents, that states that VAT
Economy and/or Financial System Stability into a Law
has been withheld and paid for. These documents are
(Law No. 2/2020). This law has come into force as of
equivalent to a tax invoice.
18 May 2020.
Further, the PMSE VAT withholder is obliged to deposit
The general elucidation of Law No. 2/2020 states that
the withheld VAT for each tax period no later than the
the Covid-19 pandemic has significantly disrupted
end of the following month after the tax period ends.
economic activities and resulted in major implications
This VAT deposit is made electronically to an account
for the economy of most countries around the world,
in rupiah, United States dollars, or other foreign
including Indonesia. Indonesia’s economic growth
currencies stipulated by the Director General of Taxes.
which is expected to fall by up to 4% or lower, depends
The PMSE VAT withholder is subsequently required on how long and how severe the spread of the Covid-19
to report VAT that has been withheld and paid for pandemic affects or even paralyzes community and
quarterly for three tax periods. The report is submitted economic activities.
no later than the end of the following month after the
The disruptions to economic activities will have
quarterly period ends.
implications for changes in the state budget posture of
The quarterly report must at least contain information the 2020 budget year, in terms of state revenue, state
on the number of buyers of goods and/or recipients of expenditure, and financing. State financial and fiscal
services, the amount of payment, the amount of VAT policy responses are called for to address the risks
withheld, and the amount of VAT paid for each tax of the Covid-19 pandemic. The implications of the
period. The report is in electronic form and submitted Covid-19 pandemic have also resulted in the threat of
through an application or system stipulated and/or a deteriorating financial system. Measures to address
provided by the Directorate General of Taxes (DGT). these implications may lead to macroeconomic and
Moreover, MoF Reg. 48/2020 authorizes the Director financial system instability in need of mitigations.
General of Taxes to request the PMSE VAT withholder Perppu No. 1/2020 was, thus, issued.