Apple, Facebook, and TikTok Subject to 10 Percent VAT Starting September 1

KOMPAS.com – The Director General of Taxes (DGT) has appointed 10 global companies that are considered to have met the criteria as Taxable Entrepreneurs (PKP).

As of September 1, 2020, these 10 companies are required to pay value added tax (VAT) of 10 percent of the pre-tax price, and must be included on the receipt or invoice issued by the seller as proof of VAT collection.

The 10 companies consist of:

  1. Facebook Ireland Ltd
  2. Facebook Payments International Ltd.
  3. Facebook Technologies International Ltd.
  4. Amazon.com Services LLC
  5. Audible, Inc.
  6. Alexa Internet
  7. Audible Ltd.
  8. Apple Distribution International Ltd.
  9. Tiktok Pte. Ltd.
  10. The Walt Disney Company (Southeast Asia) Pte. Ltd.

Previously, in July, the government had designated six digital companies as VAT collectors. The six companies are Amazon Web Services Inc., Google Asia Pacific Pte. Ltd., Google Ireland Ltd., Google LLC., Netflix International B.V., and Spotify AB.

With the addition of these 10 companies, the total VAT collector for digital products abroad has now become 16 companies.

“DGT hopes that all companies that meet the criteria, including sales of Rp. 600 million a year or Rp. 50 million per month,” wrote the Director General of Taxes in an official statement received by KompasTekno, Friday (7/8/2020).

“In order to take the initiative and inform the DGT so that the appointment preparation process including one-on-one socialization can be carried out immediately,”

 

Purpose of PKP Appointment

VAT on the use of digital products from abroad is no longer classified as a new policy. This type of tax has long been regulated by the VAT Law.

However, it is considered that VAT has not been applied evenly because it is highly dependent on manual collection actions from retail buyers.

In order to maximize these efforts, the government through the official Director General of Taxes has changed the VAT collection mechanism to be borne by overseas sellers of digital products.

“The collection of VAT is also part of the government’s efforts to create level playing fields for all business actors, especially between domestic and foreign players, as well as between conventional businesses and digital businesses,” the Director General of Taxes continued in a written statement.

 

Input Tax Crediting Terms

PKP as the buyer can credit the input tax by notifying the seller’s name and NPWP to be included on the proof of VAT collection. This is one of the requirements for completing a document equivalent to a tax invoice.

However, if the proof of collection is not equipped with the buyer’s name and NPWP, the input tax can still be credited.

This can be done as long as the buyer’s e-mail address has been registered as the email address of the taxable entrepreneur in the DGT information system or there is the buyer’s name and NPWP.

 

Source: Kompas.com

The Minister of Finance Regulation Number 35/PMK.010/2017
The Minister of Finance Regulation Number 35/PMK.010/2017

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