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11% GST applies to nonresident B2B and B2C digital transactions exceeding IDR 600 million
Indonesia is ramping up enforcement of its digital economy taxation regime, with the reaffirmed application of an 11% Goods and Services Tax (GST) on foreign companies selling digital goods and services to Indonesian customers whether business-to-business (B2B) or business-to-consumer (B2C).
The nonresident GST registration threshold remains at IDR 600 million (approximately USD 40,000) in annual taxable sales, and applies across the board for both direct consumer and enterprise sales. Businesses that cross this threshold must register, collect, and remit the 11% GST to the Indonesian tax authority.
Clear Taxability for Digital Goods
The GST framework targets a wide array of digital offerings, including:
- Software and SaaS platforms
- Streaming services and e-books
- Cloud storage and productivity tools
- Online marketplaces and digital ads
Luxury digital goods and select high-end services are subject to a higher 12% rate, though definitions of “luxury” are still under regulatory development.
“Indonesia has taken clear steps to tax the digital economy, ensuring fair contribution from both resident and nonresident businesses,” said a regional tax advisor. “Companies ignoring these obligations risk hefty penalties and reputational damage.”
How Nonresident Sellers Can Stay Compliant
To comply with Indonesian GST rules, foreign digital sellers must:
- Track customer location using billing, account, or payment information
- Determine product taxability, confirming it qualifies as a digital good
- Validate business customers’ tax IDs for B2B transactions
- Register for GST if crossing the threshold
- Apply the correct tax rate to eligible sales
- File regular returns and maintain detailed tax records
These steps mirror the requirements adopted in other APAC markets such as Australia, Singapore, and South Korea—signaling growing regional convergence in digital tax enforcement.
Delays Bring Real Risks
Delaying GST compliance can expose companies to audits, out-of-pocket tax liabilities, interest charges, and damage to their brand credibility. As governments worldwide tighten oversight, Indonesia’s move signals that tax holidays for digital multinationals are ending.
“GST compliance is no longer optional,” said a compliance officer at a global software firm. “If you operate globally, your tax operations need to scale with your business model.”
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