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Further to our earlier article on Tax Harmonization Law (Indonesia Tax Law – Overview On Taxation Harmonization Law Vol. I: Amendments To Income Tax Law And VAT Law), the Ministry of Finance (“MoF“) has issued MoF Regulation No. 60 / PMK.03 / 2022 on Procedures of Appointment of Collectors, Collection, Payment, and Reporting of Value Added Tax (“VAT“) on the Use of Taxable Intangible Goods and / or Taxable Services from Outside of the Customs Area in the Customs Area Through Trade using the Electronic System (“MoF Reg. 60/2022This regulation revokes MoF Regulation No. 48 / PMK.03 / 2020 regarding the same.
MoF Reg. 60/2022 provides further details regarding transactions through an electronic system with VAT rules and reporting obligations for VAT collectors, and VAT collection procedure.
In this article, we provide the key changes introduced by MoF Reg. 60/2022 on: (i) Taxable Intangible Goods and Services through the Electronic System; (ii) Recipient of Goods and / or Services through the electronic system (ie., the buyer); and (iii) VAT Collectors. In conclusion, given that goods and services traded through the electronic system have significant impacts on Indonesia’s economy, MoF Reg. 60/2022 serves as the government’s effort to create equality (level playing field) for all conventional and digital business actors.
A. Taxable Intangible Goods and Services through the Electronic System
Pursuant to Article 2 (1) MoF Reg. 60/2022, utilizations of intangible taxable goods and taxable services outside the customs areas for trading through electronic systems that are subjected to the VATs, including:
- The utilization or right to use copyrights in the field of literature, arts or science, patent, design or fashion, plan, formula or classified process, trademark, or Intellectual Property Right (“IPR“), industrial property right, or any related rights;
- The utilization or right to use industrial, commercial, or scientific tools and / or equipment;
- The utilization of knowledge or information in scientific, technical, industrial, or commercial fields;
- The utilization of additional or complementary assistance related to points (i), (ii), and (iii) in a form of:
- receipt or right to receive video and / or audio recordings, which are transmitted to the public through satellite, cable, fiber optic, or other similar technologies;
- the utilization or right to use video and / or audio recordings for television or radio broadcast / transmission through satellite, cable, fiber optic, or other similar technologies; and
- the utilization or right to use radio communication spectrums, wholly or partially.
- the right to use motion picture films, films, or video tapes for television, or music tapes for radio broadcast; and
- whole or partial acquisition of rights in relation to the utilization or allotment of IPR, industrial property right, or other rights.
(Article 3 of MoF Reg. 60/2022)
B. Recipient of Goods and / or Services Through the Electronic System
Article 5 MoF Reg. 60/2022 identifies the recipient of the goods and / or services (iethe “Buyer“) based on the following criteria:
- the Buyer has a permanent residence or is domiciled in Indonesia;
- the Buyer pays through debit, credit, and / or other payment facilities provided by Indonesian institutions; and / or
- the transaction is made through Indonesia’s internet protocol (“IP“) address or phone number with an Indonesian access code.
C. VAT Collectors
With regard to the party that has the right to collect VAT, Article 1 Paragraph 17 of MoF Reg. 60/2022 provides that the Collector must be a business actor that engages in trading through the electronic system, and is appointed by the Minister of Finance to collect, pay, and report the VAT collection.
Accordingly, please refer to the following paragraphs on the applicable: (i) criteria of VAT Collector, VAT Rate and payment; and (ii) reporting obligation of VAT collector.
- Criteria of VAT Collector, VAT Rate and Payment
The appointment of VAT Collector in line with MoF Reg. 60/2022 requires the fulfillment of certain criteria mentioned in Article 4 paragraph (2):
- the transaction with the Buyer in Indonesia has reached over a certain value within 12 months; and / or
- the number of traffic or access has reached over a certain value in 12 months.
The “certain value” mentioned above refers to the value stipulated in the Director General of Tax Regulation No. PER-12 / PJ / 2020 (“DGT Reg. PER-12/2020“). Based on Article 4 of the regulation, the criteria of VAT Collector are as follows:
- The transaction value with the Indonesian customers is more than IDR 600 million in a year, or IDR 50 million in a month; and / or
- The platform traffic of the Indonesian users has exceeded 12,000 within a year or 1,000 within one month.
The VAT payment shall be made electronically to the state treasury on the following VAT rates according to Article 6 paragraph (1) of MoF Reg. 60/2022:
- 11% multiplied by the tax base, effective since 1 April 2022;
- 12% multiplied by the tax base, effective based on the applicable tariffs determined by the law on VAT.
Furthermore, Article 8 Paragraph (3) of MoF Reg. 60/2022 stipulates that the VAT payment to the state treasury can be made in the following currencies:
- Rupiah currency, with the exchange rate determined by MoF Decree applied during the date of payment;
- United States Dollar; or
- other foreign currency as determined by the Directorate General of Taxation.
- VAT Collector’s Reporting Obligations
Article 9 MoF Reg. 60/2022 further provides that a VAT Collector must submit a quarterly report in electronic form on the collected VAT, no later than the end of the following month of each fiscal period through a system appointed by the Director General of Taxation.
The report includes the following information:
- total number of Buyers or Recipients of the Goods and / or Services;
- total payment;
- the amount of VAT collected; and
- details of VAT transactions, which include:
- number and date of each VAT invoice;
- total payment for each (not including VAT) VAT invoice
- the amount of VAT collected for each VAT invoice; and
- the name and Tax ID (Nomor Pokok Wajib Pajak or “NPWP“) of Buyers or Recipients of the Goods and / or Services if they are stated in the VAT invoice.
Please note that based on Article 10 (1) MoF Reg. 60/2022, the Director General of Tax is also authorized to request a detailed report on the VAT collected by the VAT Collector in one calendar year.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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