Indonesia: Taxation on e-commerce transactions

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Indonesia: Taxation on e-commerce transactions

intl-updates-small.jpg

The finance minister is planning to issue a new regulation concerning taxation on e-commerce transactions, including the applicable tax rate and the mechanism on how to collect the tax.

Back in 2013, the Directorate General of Tax (DGT) issued Circular Letter No. SE-62/PJ/2013 concerning the Confirmation of Provisions of Taxation on E-Commerce Transactions (Circular Letter). In general, the Circular Letter confirms which provisions under the taxation laws apply to taxpayers who conduct e-commerce transactions. "E-commerce" is defined as the trading of goods and/or services conducted by entrepreneurs and consumers through an electronic system. There is no further explanation on what an electronic system is, thus, reference may be made to the relevant regulations in the communications and informatics sector. The said regulations define an "electronic system" as a series of electronic devices and procedures for preparing, collecting, processing, analysing, storing, displaying, publishing, transmitting, and/or distributing electronic information.

Under the Circular Letter, a taxpayer conducting e-commerce transactions shall be subject to the following income taxes and VAT.

Income tax

Any additional economic capability received by a taxpayer, whether generated within Indonesia or overseas, which may be used for consumption or to add to the wealth of the taxpayer, in any name or form, inter alia but not limited to: (i) income from salaried and freelance works; (ii) income from business and activities; (iii) income from capital, in the form of movable or immovable assets, such as interests, dividends, royalties, rents, and profits from sales of assets or rights not intended for business; and (iv) other income shall be classified as an income, and thus subject to income tax under the Income Tax Law.

In consideration of the above, any income obtained by a taxpayer from e-commerce transactions conducted through an electronic system must also be subject to income tax. The amount of payable tax has to be calculated in accordance with the prevailing regulations.

VAT

Provisions in the VAT Law and its implementing regulations also apply for taxpayers who conduct e-commerce transactions. Under the VAT Law, VAT is imposed to, among others: (i) delivery of taxable goods/services within customs area by taxable entrepreneurs; (ii) importation of taxable goods; (iii) utilisation of intangible taxable goods and/or taxable services from outside the customs area to within the customs area; and (iv) exportation of tangible taxable goods and intangible taxable goods, and/or taxable services by taxable entrepreneurs. Further, sales subject to the luxury goods tax shall also apply for: (i) the delivery of taxable luxury goods by an entrepreneur producing the goods within the customs area in its business activities or works; and (ii) importation of taxable luxury goods.

Since e-commerce transactions involve the delivery of goods/services (including luxury goods), they are also subject to VAT and the sales on luxury goods tax (as applicable).

Karyadi

Freddy Karyadi

 

Santoso

Nina Cornelia Santoso

Freddy Karyadi (fkaryadi@abnrlaw.com) and Nina Cornelia Santoso (nsantoso@abnrlaw.com), Jakarta

Ali Budiardjo, Nugroho, Reksodiputro, Law Offices

Tel: +62 21 250 5125

Website: www.abnrlaw.com

more across site & shared bottom lb ros

More from across our site

It follows a court case concerning a Freedom of Information request lodged by the founder of a software company
After years of deafening silence, the UK tax authority is taking overdue action against corporates that fail to prevent the facilitation of tax evasion
The US president has raised India’s tariff rate to 50% because of its importation of Russian oil; in other news, firms made key international tax partner hires
Tax auditors themselves had not been aware of the new TP ‘transaction matrix’ requirements, ITR hears as five German partners share their client experiences
Its features include a built-in AI assistant as well as expert insights and commentary from Deloitte specialists
AI is rapidly finding its way into tax advisory services. But how can AI be deployed responsibly, reliably, and in compliance with legal standards?
Specified taxpayers will have to apply a 19% VAT rate on services offered by third parties through their platforms; in other news, Donald Trump imposed 30% South African tariffs
A ‘quiet revolution’ in HMRC’s compliance strategy has caused Adam Craggs to rethink how to advise clients, he tells ITR
If the Reform leader becomes UK prime minister then he may follow the direction of the US in at least one significant way
Trump declared a new national emergency in issuing the order; in other news, Grant Thornton Germany is up for sale and the subject of interest from both its UK and US counterparts
Gift this article