VAT Obligation For Transactions In The Digital Techniques: Key Factors On The Ministry Of Finance Regulation No. 60/PMK.03/2022 – Gross sales Taxes: VAT, GST

08 July 2022

Nusantara Legal Partnership

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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. 60/2022“). This 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 (i.e., 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:

  1. 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;
  2. The utilization or right to use industrial, commercial, or
    scientific tools and/or equipment;
  3. The utilization of knowledge or information in scientific,
    technical, industrial, or commercial fields;
  4. The utilization of additional or complementary assistance
    related to points (i), (ii), and (iii) in a form of:

    1. receipt or right to receive video and/or audio recordings,
      which are transmitted to the public through satellite, cable, fibre
      optic, or other similar technologies;
    2. the utilization or right to use video and/or audio recordings
      for television or radio broadcast/transmission through satellite,
      cable, fibre optic, or other similar technologies; and
    3. the utilization or right to use radio communication spectrums,
      wholly or partially.
  5. the right to use motion picture films, films, or video tapes
    for television, or music tapes for radio broadcast; and
  6. 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 (i.e., the
Buyer“) based on the following
criteria:

  1. the Buyer has a permanent residence or is domiciled in
    Indonesia;
  2. the Buyer pays through debit, credit, and/or other payment
    facilities provided by Indonesian institutions; and/or
  3. 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.

  1. Criteria of VAT Collector, VAT Rate and
    Payment

The appointment of VAT Collector in line with MoF Reg. 60/2022
requires the fulfilment of certain criteria mentioned in Article 4
paragraph (2):

  1. the transaction with the Buyer in Indonesia has reached over a
    certain value within 12 months; and/or
  2. 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:

  1. 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
  2. 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:

  1. 11% multiplied by the tax base, effective since 1 April
    2022;
  2. 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:

  1. Rupiah currency, with the exchange rate determined by MoF
    Decree applied during the date of payment;
  2. United States Dollar; or
  3. other foreign currency as determined by the Directorate General
    of Taxation.
  1. 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:

  1. total number of Buyers or Recipients of the Goods and/or
    Services;
  2. total payment;
  3. the amount of VAT collected; and
  4. details of VAT transactions, which include:
    1. number and date of each VAT invoice;
    2. total payment for each (not including VAT) VAT invoice
    3. the amount of VAT collected for each VAT invoice; and
    4. 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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