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New Tax Rules for Digital Businesses Including Airbnb and Booking.com

tax digital
New Tax Rules for Digital Businesses Including Airbnb and Booking.com

The Directorate General of Taxes of the Finance Ministry has again appointed four companies that meet the criteria as collectors of value-added tax (VAT) for trading through the electronic system (PMSE).

Director of Counselling, Services and Public Relations Neilmaldrin Noor said the appointment made 94 digital companies subject to taxation, including Airbnb.

The newly appointed PMSE are Booking.com BV, EA Swiss Sarl, Elsevier BV, Native Instruments GMBH, Upcloud Limited, Mega Limited, and Airbnb Ireland Unlimited Company,” said Noor in a press release on Friday 7th January.

Noor said that the 94 PMSE were the result of appointments, corrections, and revocations. Since the Trading Through the Electronic System’s VAT regulation came into effect in July 2020, the Directorate General of Taxes has only revoked it once, namely for PT Fashion Eservice Indonesia (Zalora), in December 2020.

The rests are appointments and corrections. Most recently, it corrected one PMSE in November 2021 and corrected four in December 2021.

The new corrections are Linkedin Singapore Pte. Ltd, Expedia Lodging Partner Services Sarl, Hotels.com, LP, BEX Travel Asia Pte. Ltd., and Travelscape, LLC.

“These businesses are engaged in cloud computing, travel booking services, social networks, game services, and others who sell their products and services to consumers in Indonesia,” explained Noor.

Consumer prices could rise

With the appointment of the PMSE businesses, the price of goods and services offered will be more expensive. This is because they are obliged to collect and deposit value-added tax (PPN) on intangible taxable goods (BKP) and/or taxable services (JKP) from abroad which they sell to domestic consumers.

Like other appointed PMSE businesses, these newly appointed ones are required to collect a VAT of 10 percent of the value of the money paid by the buyer, excluding the VAT.

Valued added tax collection is carried out at the time of payment by the buyer of goods and/or recipients of services to the company,” he said.

These businesses are also required to provide proof of VAT collection, which can be in the form of a commercial invoice, billing, order receipt, or a similar document that confirms the collection and payment has been made.

As of 31st December 2021, 74 PMSEs have collected and deposited valued added tax with a value of Rp4,634.7 billion.

“The Directorate General of Taxes continues to identify foreign PMSE businesses in Indonesia so that the number of value-added tax collectors will increase in the near future,” said Noor.

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