Indonesia To Seek VAT From Overseas E-Services Providers

by Mary Swire, Tax-News.com, Hong Kong

25 July 2019

Indonesia's Ministry of Finance is preparing a legislative response to ensure the collection of VAT on electronically supplied services to Indonesian consumers.

Under the proposals, online retailers would be required to collect VAT on supplies to Indonesian consumers. The Government would look to the experiences of other territories that have implemented similar requirements in recent years.

The collection of VAT on electronically supplied services was one of two concrete policy recommendations emanating from the OECD's work on the taxation of the digital economy, the second being the removal of exemptions for low-value consignments. These were incorporated into its latest International VAT/GST Guidelines, which countries have been encouraged to adopt.

The Government is also reportedly considering issues surrounding the taxation of income derived from the participation of Indonesian users in online platforms and is looking to the OECD for solutions.

Separately, the Ministry also said it would continue to tax supplies of aviation fuel used in international flights, ruling out the possibility of VAT being waived, despite criticism by industry of the position.

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