Indonesia: New customs and VAT obligations on imported software products, other digital goods
Customs obligations for imported goods-for-use, including intangible goods such as software and digital products that are transmitted electronically
New customs and VAT obligations on imported software products, other digital goods
The government issued Regulation of the Minister of Finance No.190/PMK.04/2022 (PMK-190) concerning the customs obligations for imported goods-for-use, including intangible goods such as software and digital products that are transmitted electronically.
Any company that imports intangible goods must pay attention to the following customs and tax obligations:
- Submit an import of goods notification form any time intangible goods are imported into the country. This must be done no later than 30 days from the date of payment.
- Pay the import duty and tax relating to importation, which consists of value added tax (VAT), sales tax on luxury goods, and Income Tax Article 22 on imports. This needs to be done before submitting the import of goods notification form.
PMK-190 was issued to optimize the supervision and service of imported goods-for-use and to accommodate the regulations for the import of digital goods. Therefore, companies must be aware of their obligation to submit an import of goods notification form, pay their import duties, and pay the import duty and tax relating to importation for the import of intangible goods such as software and digital goods. This obligation is also applicable with regard to purchasing software by downloading it over-the-air.
It is unclear whether a company that has paid the offshore VAT on the utilization of intangible taxable goods from offshore in Indonesia must also pay the import VAT. Therefore, there is potential double VAT on the import of intangible goods.
There is no clear confirmation on whether import VAT must also be paid and included in the import of goods notification form for the purchase of intangible goods if done by trade through an electronic system (PMSE) if the e-commerce VAT was collected by a foreign e-commerce VAT collector.
Companies have an obligation to withhold Income Tax Article 26 on payments to a foreign company for the use of intangible goods in Indonesia. Besides PMK-190, there is an additional income tax obligation for companies to pay Income Tax Article 22 on imports of intangible goods. It can be credited by companies with their annual corporate income tax.
Certain royalty payments must be added into the customs value as a part of the calculation for the payment of import duties and import duty and tax relating to importation.
Apply for an API (Angka Pengenal Impor (Importer identification number) as this will reduce the cash flow for Income Tax Article 22 on imports payments whenever this is commercially feasible.
Read a March 2023 report [PDF 420 KB] prepared by the KPMG member firm in Indonesia
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