Starting July 1st, Digital Products from Abroad Will Be Collected With VAT

Starting from July 1st, 2020, the activity of utilizing (importing) digital products will be subject to a value added tax (VAT) or PPN of 10 percent.

Tax illustration., BATAM - Starting from July 1st, 2020, the activity of utilizing (importing) digital products in the form of intangible goods and services by domestic consumers will be subject to a value added tax (VAT) or PPN of 10 percent.

The collection, deposit and reporting of VAT on digital products originating from abroad will be carried out by trading businesses through the electronic system (PMSE), namely traders / providers of foreign services, overseas PMSE providers, or domestic PMSE providers appointed by the Minister Finance through Director General of Taxes.

The imposition of VAT on the utilization of digital products from abroad is part of the government's effort to create a level playing field for all business actors, especially between domestic and foreign players, as well as between conventional businesses and digital businesses.

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 that are consumed daily by people who have been subject to VAT, and similar digital products produced by domestic business actors.

PMSE business operators who meet certain transaction value criteria or the amount of traffic within 12 months are appointed by Minister of Finance through Director General of Tax as a VAT collector.

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Business actors who have met the criteria but have not been appointed as VAT collectors can submit notifications online to tDirector General of Taxes.

As with domestic VAT collectors, the appointed business actor is also required to deposit and report VAT.

Deposit of VAT collected from consumers must be done no later than the end of the following month, while reporting is done on a quarterly basis at the latest the following month after the quarter period ends.

Complete arrangements regarding the procedures for collection, deposit, and reporting of VAT can be seen in Regulation of Minister of Finance Number 48 / PMK.03 / 2020, a copy of which is available at

Criteria and list of business actors appointed as VAT collectors for digital products from abroad will be announced afterwards.

In addition to creating equality between businesses, the application of VAT for digital products from abroad is also expected to increase state revenue which is currently very important as a source of funding to cope with the economic impact of Covid-19 outbreak. ( Rebekha Ashari Diana Putri)

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Penulis: Putri Larasati Anggiawan
Editor: Putri Larasati Anggiawan
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