TAX Treatment of Trade Transactions Through E-COMMERCE

The Indonesian Tax Authority has regulated the tax treatment of trade transactions through an electronic system (e-commerce). The regulation is stipulated in PMK No.210/PMK.010/2018 and is effective on April 1, 2019.

In the regulation, the law of tax treatment on e-commerce includes Value Added Tax, Sales Tax on Luxury Goods, Income Tax on transactions within the Customs Area, and Import Duty on imported goods. E-commerce can be done through marketplace and other platforms, such as online retails, classified ads, daily deals, or social medias.

Along with the technology advancement, buying and selling transactions are not limited by space and time. Almost all products and services can be marketed through e-commerce scheme; in simple terms, e-commerce is the distributions, sales, purchases, and marketing of goods or services that rely on electronic systems and the Marketplace Platform as a place for buying and selling transactions to be carried out.

Trading through an electronic system (e-commerce) of goods and/or services within the Customs Area through the Marketplace Platform is carried out in the following ways:

  • Marketplace Platform Providers provide trading services through electronic systems (e-commerce) for goods and/or services;
  • Merchants or Service Providers use the Platform facilities provided by the Marketplace Platform Providers to trade through electronic systems (e-commerce);
  • Buyers of goods or service recipients make transactions to purchase goods and/or services through the Marketplace Platform Provider; and
  • Payments for trade in goods and services through an electronic system (e-commerce) by buyers to Merchants or Service Providers are made through the Marketplace Platform Provider.

The following are the tax implications that occur on the marketplace platform:
– The Marketplace Platform Provider must have an NPWP and be confirmed as a Taxable Entrepreneur (PKP). – PKP Merchants or PKP Service Providers who deliver Taxable Goods (BKP) and/or Taxable Services (JKP) electronically (e-commerce) through Marketplace Platform Providers are required to collect, deposit, and report:

a.Value Added Tax payable; or
b.Value Added Tax and Sales Tax on Luxury Goods. Value Added Tax payable is 11% (eleven percent) of the Transaction Value of BKP and/or JKP submission. Rates are effective April 1, 2022.

– Merchants or Service Providers who deliver goods and/or services electronically (e-commerce) through Marketplace Platform Providers must carry out Income Tax obligations by the legislation’s provisions in the Income Tax Law.

– The Marketplace Platform Provider must report the recapitulation of trade transactions carried out by Merchants and/or Service Providers through the Marketplace Platform Provider to the Directorate General of Taxes. The recapitulation of trade transactions, as referred to, is a document that must be attached to the Periodic VAT Return. The Marketplace Platform Provider is also required to make a Tax Invoice.

Customs regulations for marketplace platform providers who import:
The Directorate General of Customs and Excise applies rules on imports on the marketplace platform in the form of:

– Import Goods that:

  • the transaction is carried out through a Marketplace Platform provider registered with the Directorate General of Customs and Excise;
  • the delivery is made through the Postal Operator;and
  • has a customs value of up to Free On Board (FOB) USD 1,500 (one thousand five hundred United States Dollars), the tax treatment is carried out based on a Ministerial Regulation.

– Import of goods whose transactions are carried out through the Marketplace Platform Provider:

  • has a customs value of more than Free On Board (FOB) USD 1,500 (one thousand five hundred United States Dollars); or
  • not using the Delivery Duty Paid (DDP) scheme, carried out by the laws and regulations governing the import of consigned goods.

Marketplace Platform Providers with a high frequency of imports of goods can apply for registration to the Head of the Customs Office.

After obtaining approval, the Marketplace Platform Provider must submit an e-invoice for every shipment of goods and e-catalog transactions and must, calculate import duties and/or PDRI, and be responsible for the obligation to deposit import duties and/or Taxes in the Context of Imports (PDRI) on goods.

Indonesia Tax Authority (ITA) plans to impose a stamp duty for the terms and conditions (t&c) on digital platforms such as e-commerce of IDR 10,000. This is by Article 3 paragraph (2) of Law Number 10 of 2020 concerning Stamp Duty.