Learn how Zonos helps manage the Indonesian taxation law.
Indonesia’s new taxation has been in effect since August 1, 2020.
Let’s decode this law and what it means for businesses selling goods to Indonesia.
What is the annual threshold for the Indonesian taxation law?
As a retailer, if you sell over 600 million rupiah annually or if your website traffic exceeds 12,000 per year in Indonesia, you may be appointed by the Director-General of Tax as a VAT collector. The Indonesian government does not specify whether or not a PMSE (trading through electronic systems) business falls under the criteria of a VAT collector.
This appointment is issued by the Director of General of Tax Decree and would begin the month following the Decree.
What do I do if I’m above the 600 million rupiah threshold?
If you’re above the threshold and appointed, the Director-General of Tax will give you a tax identity number in the form of a Registration Letter (Surat Keterangan Terdaftar), which is used to complete tax rights and other obligations. After you’re appointed, you will need to activate your account and update your data online through an application system provided by the Director-General of Tax. Once you complete this form, your appointment as a VAT collector will be effective.
An appointed VAT collector must collect 10% multiplied by the Tax Imposition Base, which is the amount paid by the buyer (not including the VAT). The VAT applies to all intangible goods and taxable services.
As a VAT collector, you will be required to report and pay the VAT quarterly for three tax periods.
The Director-General of Tax can discontinue your appointment as a VAT collector if your business no longer meets the criteria. The revocation is completed through another Decree provided by the Director-General of Tax.
Calculate and collect VAT with Zonos
If you are appointed as a VAT collector, contact Zonos, and we can help you update your account inside of your Zonos Dashboard.
By updating your account, your Zonos Checkout or API will automatically start calculating 10% VAT on all orders to Indonesia.
Remit VAT quarterly
If you are appointed as a VAT collector, the VAT you collect from Indonesian consumers must be remitted quarterly to the Director-General of Tax. Contact Zonos for more information on having Zonos handle this process for you.
How likely am I to be appointed as a VAT collector?
To date, not very likely. The Director-General of Taxes has only appointed six companies as VAT collectors. These companies include Netflix, Spotify, Amazon, and Google.
Zonos recommends
Wait to hear from the Indonesia Director-General of Tax. If you are appointed as a VAT collector, they will reach out to you directly and provide you with further instructions.
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Additional resources
- Correspondence with the Ministry of Finance Portal, Management Section Data Management and Information Services, Communication and Information Services Bureau, Ministry of Finance, Indonesia
- Lexology: Indonesia Government issues new regulation on details of VAT obligations related to transactions through electronic systems
Indonesia taxation law