Foreign Digital Service Providers in Indonesia Will Pay VAT

Decree No. 48 has been published on the official website of the Government of Indonesia, according to which new rules for digital service providers from abroad are in force. In particular, foreign companies will now have to pay value-added tax. The tax rate for organizations will be 10%.

According to Decree No. 48, digital services for the processing of financial transactions will be taxed. The tax will be paid by companies offering Indonesian customers a subscription to music, providing desktop and mobile applications, games, and other online services from abroad. A 10% VAT rate is already applied to companies operating in Indonesia. Thus, the government establishes uniform rules for both local and foreign organizations.

The Indonesian government will determine which companies must pay value-added tax. In addition, certain criteria will be set. If the organization complies with them but is not included in the list published by the Ministry of Finance of the country, it will have to contact the General Directorate of Taxation on its own.

Law&Trust offers services for digital service providers in Indonesia. Our lawyers will tell you in detail which companies should pay tax and how to prepare reports correctly.