Indonesia VAT on Non-Resident Providers of Digital Services 

Indonesia VAT framework on non-resident providers of digital products and services came into effect on July 1, 2020. Since then, the system has been adjusted to some extent, in direct correlation with the results obtained from the VAT collections of the accountable parties. 

The introduction of the specifically designed regime for non-resident digital service/product providers mandated the obligation to register, collect, and report VAT under specific Indonesia-based threshold triggers. 

The principal regulations that regulate this framework are the Ministry of Finance Regulation No. 48/2020 and the Director General of Taxes Regulation Number PER-12/PJ/2020. 

The most notable revision of the VAT framework for providers of digital services and products occurred through the adoption of the Director General of Taxes Regulation (PER) Number PER-12/PJ/2025, which has revised some key provisions of the Regulation Number PER-12/PJ/2020. 

Indonesia VAT on Digital Services

New Framework 

From July 1, 2020, the Indonesian VAT rules for non-resident digital providers became part of the VAT collection system. Non-resident providers of digital products and services became responsible for proper administration of VAT for the digital products or services provided to local customers. 

This framework is widely conceptualized through the abbreviation PMSE(“Trade Through Electronic Systems”). 

From this date, the accountable VAT persons should register for Indonesian VAT to be able to collect, report, and remit VAT. The party responsible for VAT collection in these instances shall be the digital service provider appointed as Designated Party to Collect, Remit, and Report VAT

The appointment of the accountable VAT collectors shall be an administrative procedure handled by the Revenue Administration and Ministry of Finance. 

The collectors of the “digital VAT” appointed by the Ministry of Finance could be the following persons: 

Foreign Electronic Trade Operators(PMSE operators), which include:

• Foreign Merchants
• Foreign Service Providers
• Foreign Digital Platform Providers

Domestic Electronic Trade Operators(PMSE Operators), which include:

• Domestic Digital Platform Providers

Registration 

As previously mentioned, the procedural part concerning the “appointment” of the PMSE operator for VAT collection is a procedure accredited by the Ministry of Finance. The non-resident digital service/product provider should register for Indonesia VAT if it meets any of the following criteria: 

1. Economic nexus of IDR 600,000,000 (six hundred million rupiah) annually or IDR 50,000,000 (fifty million rupiah) monthly and/or 
2. The number of users or traffic on its website from Indonesia exceeds 12,000 annually or 1,000 monthly.

Considering that the economic threshold is very low, circa USD 34,000, and that more than 75% of the population(circa 220 million) are users of digital products and services, thousands of online merchants, digital service providers, and digital platform operators shall be designated as VAT collectors. 

 The registration threshold is based on all gross sales, covering B2C and B2B transactions as well. 

“Traffic” or “users” refers to the number of visitors to the provider’s or merchant’s website. Traffic and users are not limited to activities that generate sales. The amount of sales has been represented in the first criterion as “total sales.” 

PMSE operators may also voluntarily register for Indonesia VAT. 

Representative

Non-resident providers of digital services may elect to register directly or through a delegated representative following the simplified registration procedure.

The foreign seller appointed as the VAT Collector does not need to have a representative in Indonesia in order to do VAT collection.

Place of Supply Rules 

Indonesia VAT framework for determining the place of supply rules for digital services is developed in alignment with best practices established specifically for the digital economy. If the local customer acquires the digital service from a foreign supplier(without PE or any sort of physical nexus in the country), and conditions from the list below are met, the place of supply for digital services is in Indonesia: 

1. billing, residential or business address of the recipient is in Indonesia;
2. payment for such digital services is made through a bank or financial institution in Indonesia;
3. payment instrument used for the transaction is issued in Indonesia; or
4. internet protocol address of the device used by the recipient is located in Indonesia 

Indonesia VAT Rate: The provider of digital services should levy VAT at 12% applied to a deemed base of 11/12 of the payment excluding VAT. 

B2C Remote Services

Non-resident digital service providers that provide services to local customers should charge, collect, and remit VAT at the rate of 12 % on each B2C supply. 

B2B Remote Services

Non-resident digital service providers should charge, collect, and remit VAT at the rate of 12% on supplies to local business entities(except in cases where the customer is exempt).

For B2B transactions, businesses (consumers) can claim input VAT. In order to do so, the locally registered taxable person needs to inform the seller (the VAT Collector) about its name and Tax Identification Number to be recorded in the invoice.

When the seller has been appointed as the VAT Collector, the Indonesian customer is no longer required to pay VAT by itself under the reverse charge mechanism.

Scope of Digital Services 

Digital goods have been defined in PMK-48/2020. All digital taxable goods are taxable goods under VAT Law.

The Finance Act 2025 and Guidelines issued by the Indonesia Revenue Authority define the scope of electronic services as follows: 

• Online advertising 
• Streaming 
• Software and applications 
• Marketplaces and e-commerce
• Cloud and hosting
• Online gaming and betting
• Paid social networks and premium features, Business tools
•  VPNs, antivirus, and security tools 
• Digital products such as: Video, audio, and other audio-visual content
• Electronic books, magazines, and comics

Digital Platforms

The operators of digital platforms or marketplaces are in the scope of the Indonesia VAT regime. 

An e-commerce platform appointed as the VAT Collector should collect, remit, and report VAT collection for any transaction made through its platform.

If there is any seller who is also appointed as the VAT Collector and makes transactions both directly and through an e-commerce platform (the VAT Collector), thus, seller only collects, remits, and reports VAT for transactions made directly to Indonesian customers.

When the local or foreign marketplace has been appointed as the VAT Collector, that local or foreign marketplace should collect VAT instead of the foreign supplier.

If a foreign provider has been appointed as the VAT Collector, then that foreign company collects VAT instead of the customer.

VAT Declaration and Remittance 

The VAT Collector submits the report of VAT collection through the DGT Portal. 

VAT collected should be remitted on a monthly basis, no later than the end of the month following the relevant tax period.

Foreign PMSE Operators may remit the VAT in Indonesian Rupiah (IDR) or United States Dollar (USD).

Domestic PMSE Operators should remit VAT in Indonesian Rupiah (IDR).

PMSE VAT Collectors should file a VAT Periodic Return (SPT Masa PPN) for each tax period, no later than the end of the month following the end of the tax period.

Foreign PMSE Operators should use the E-commerce VAT Periodic Tax Return.

VAT returns should be filed via the Taxpayer Portal or other platforms integrated with the DGT’s administrative system.

Appointed PMSE operators should file a monthly VAT Periodic Tax Return (SPT Masa PPN) electronically via the Directorate General of Taxes Coretax Portal no later than the end of the month following the tax period. 

DGT will only appoint businesses who meets criteria to be the VAT Collector. Indonesian business (consumer) who purchase services from a foreign business that has not been appointed as the VAT Collector should pay VAT by themself.

The foreign VAT Collector itself will decide whether to pay and report VAT collection using USD or Rupiah currency. The VAT collectors do not need to get DGT approval to make remittances or reports in USD.

Payment could be processed directly by the respective taxable person or through its representative. 

Invoicing 

A tax invoice related to PMK-48/2020 as proof of VAT collection should be issued in accordance with the “standard” accounting system. The most important lines which accounting document needs to include are the VAT charged and collected. 

It may be in the form of commercial invoices, billings, order receipts, or other similar documents.

However, for B2B transactions, businesses (consumers) can claim input VAT. In order to do so, the business (consumer) needs to inform the seller about its registered business name and TIN (in Indonesia, it is called NPWP) to be recorded on the invoice.

Penalties

E-Commerce VAT Collector who does not comply with the provisions in the Regulation of the Minister of Finance, along with its implementing regulations, in addition to being subject to administrative penalties in accordance with tax laws and regulations, is also subject to penalties in the form of termination of access after being previously formally notified about its wrongdoings.

Non-resident digital service providers could face various fines and penalties for late registration, late filing, and late payment

How to Stay Compliant 

Indonesia VAT regime for non-resident digital service providers has been in place for more than six years. The amendments adopted in 2025 to the VAT regulations for digital service providers introduced important novelties for “faster” tax reporting, introduced a higher VAT rate, and more supervision for appointed VAT collectors.

We have continuously followed the legislative updates concerning the introduction of the VAT regime for overseas providers of digital services. 

The advisory role offered by 1stopVAT for these providers extends to understanding the threshold exposure for registration, accountability for VAT, assistance with return preparation, and remittance of the owed tax.

Where we cannot manage your VAT requirements directly, we have a great network of local tax agents who will take care of this. 

In addition to successfully managing your registration, we can offer additional services for digital service providers in Indonesia, such as: 

• Assistance with Tax Reporting
• Tax Advisory and Ongoing Tax Management
• Correspondence with Tax Authorities

Takeaway

Frequently Asked Questions