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Indonesia Charges 10% VAT on Global Digital Products and Services

By Eskanisa R

07 July 2020

Criteria for goods buyers or service recipients who will be charge to 10% VAT.

Photo source: Pixabay
Government officially charges 10% VAT (Value Added Tax) for purchases of digital products including applications and online games as well as services from abroad. Based on the Minister of Finance Regulation (PMK) No. 48/PMK/03/2020 which initiated on May 15, imported digital products in form of services and goods will be charged 10% VAT of the original prices.
According to the Director General of Taxes, VAT is expected to help government to survive due this pandemic which affected national economic as well as creating the equality for all business people, either conventional or digital for both domestic and foreign.
Hence, the collection, reporting, and payment of VAT for global digital products will be carried out by trading businesses through the electronic system or PSME. In other words, digital products including music, film streaming services, applications, games and other online services from abroad will be treated as same as conventional domestic products (as daily consumption products) with 10% VAT.
Quoted from here are three points for buyers to concern due to this regulation based on PMK No. 48/PMK.03/2020:
  1. Living in Indonesia (the correspondence or billing address live in Indonesia or is considered to be located in Indonesia if choose Indonesia when registering on website and/or system which provided by the PMSE VAT collector).
  2. Make payments using debit, credit, and/or other facilities provided by institutions in Indonesia.
  3. Transaction using internet protocol addresses or telephone numbers with Indonesia dialing code.

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