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.

2. 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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