The Directorate General of Taxes (DGT) will place taxpayers classified as business persons who conduct trade through electronic system (PMSE) or commonly referred to as e-commerce entrepreneurs into one special Tax Office (KPP), namely Foreign Corporate and Individual Tax Office (KPP Badan dan Orang Asing). This provision is contained in Regulation of the Director General of Taxes number PER-07 / PJ / 2020 which is effective from 17 April, 2020.
According to this provision, what is meant by an e-commerce actor is the one who has been appointed by the Minister of Finance and fulfills his obligations as a collector of Value Added Tax (VAT) on the PMSE (E-commerce) and who meets the principle of significant economic presence to be the subject of Income Tax or electronic transaction tax.
This regulation was issued after the government decided to change the concept of taxation to BUT (Permanent Establishments) which was previously based on physical presence, to be based on significant economic presence. This provision is contained in Government Regulation in Lieu of Law (Perppu) number 1 of 2020.
The placement of e-commerce taxpayers in Foreign Corporate and Individual Tax Office can be done in a position by the DGT, or registration by taxpayers. If the placement is carried out by the DGT, then the former tax office and Jakarta Special Regional Tax Office will notify the taxpayer within five days after being registered.
This policy is made so that DGT can easily monitor the tax compliance of companies engaged in the business of e-commerce and simplifies the tax administration process.
Read: Indonesia Cuts Tariff on Corporate Income Tax and Officially Applies Digital Tax
Foreign Corporate and Individual Tax Office is actually not specified for e-commerce business persons, there are several taxpayer criteria that will be placed in this tax office:
- Permanent establishment taxpayer domiciled in the province of DKI Jakarta
- Foreigner residing in DKI Jakarta
- Permanent Establishment (BUT) which is an e-commerce provider domiciled in DKI Jakarta
- Corporate taxpayer which is the provider of domestic e-commerce
- Overseas Trader
- Overseas Service Provider
- International organizations including income tax (PPh) subject
Special Type of Tax
In addition to regulating the placement of e-commerce taxpayer, this provision also emphasizes the tax obligations that must be fulfilled by the e-commerce actors.There are several tax obligations that must be completed, including VAT, Income Tax and Electronic Transaction Tax.
Imposition of Income Tax for permanent establishment electronic transactions because it meets the provisions of significant economic presence whose home country has a Double Tax Avoidance Agreement or tax treaty and Prevention of Tax Avoidance with the Indonesian Government.
While electronic transaction tax will be applied, if the imposition of income tax cannot be applied. Thus, the electronic transaction tax will be the special type of tax that is applicable to the income obtained by the e-commerce actors.
