Tax Collection for Digital Business – Indonesian government has determined the collection of VAT on the sale of digital goods and services by sellers by foreign traders or service providers, both directly and through the marketplace platform. With the enactment of these provisions, digital products such as streaming music subscriptions, streaming films, digital applications and games, as well as online services from abroad will be treated the same as conventional products consumed daily by people who have been subject to VAT, and digital products sold by domestic business actors.
The Director General of Tax of the Ministry of Finance (MoF) ensured that the government continues to work to regulate digital corporate taxes. Among them by inviting service providers for Over The Top (OTT) from abroad to register themselves as Permanent Establishments in Indonesia (BUT). Encouragement is done to encourage tax revenue and create a level of playing field. The Director General of Tax of the Ministry of Finance (Kemenkeu) said that the invitation was carried out by involving regional offices. If an OTT company is registered as an Indonesian permanent corporation based on the physical presence principle, the government can ‘levy’ Value Added Tax (VAT) and Income Tax (PPh). This invitation was carried out along with efforts to redefine BUT through omnibus law. Later, BUT will no longer consider the physical presence of the office, but rather the presence of significant economic values and activities or called significant economic presence.
In principle, the Director General of Tax of the Ministry of Finance ensures that the government wants business processes in Indonesia to run fairly between conventional and digital businesses. Those who ‘sell’ on the Indonesian market and earn any income will automatically have to pay taxes. The Director General of Tax of the Ministry of Finance said that tax collection on digital companies is one of the urges to be regulated in the omnibus law. With this, international digital companies can collect, deposit and report taxes so there is no tax avoidance.
The Director General of Tax of the Ministry of Finance said that the collection of value added tax (VAT) on types of digital goods and services began on July 1, 2020 using a new method. The government appoints digital companies as collectors, depositors, and VAT reporters on these products. The Director General of Tax also explained that VAT payments should be made by consumers or people who consume these products, which is also in accordance with the 1983 VAT Law. According to the Director General of Tax this rule applies to all goods both from outside and within the country.
Thus, the government issued Perppu Number 1 of 2020 which has now been established as a law. The Government also makes derivative rules as its implementation, namely PMK Number 48 of the Procedure for Appointment of Collection, Collection and Deposit, As well as Reporting Value Added Tax on Utilization of Intangible Taxable Goods and / or Taxable Services From Outside the Customs Area Within the Customs Area Through Trade Weighing Through Electronic Systems.
This policy is carried out to implement Article 6 paragraph 13a Perppu Number 1 of 2020 concerning State Financial Policy and Financial System Stability for Handling COVID-19, in which the government establishes Minister of Finance Regulation Number 48/PMK.03/2020 as its derivative. Through this regulation, digital products such as streaming alias streaming services, both music and films, digital applications and games, and other online services from abroad that have a significant economic presence and have taken economic benefits from Indonesia through trade transactions, will be treated the same such as conventional products or similar digital products from within the country.
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