Indonesia to charge VAT on fintech transactions

Indonesia will levy VAT on fintech transactions, including payment gateways, digital wallets and insurtech contracts. Indonesia’s government is also set to impose income tax on interest generated through peer-to-peer lending.

Tax on income earned through interest is set at 15% for local taxpayers and 20% for froeign businesses. 

The new tax regulations take effect from 1 May 2022.

VAT on crypto sales

Indonesia’s finance ministry has also imposed VAT of 0.1% on crypto asset purchases. Capital gains on crypto transactions will also be subject to a tax of 0.1%. 

As global regulators continue to grapple with how to charge VAT on cryptocurrencies, traders should pay close attention to their potential obligations. 

VAT on electronic services in Indonesia

Since 2020, Indonesia has also more broadly implemented VAT on digital services provided by nonresident businesses. 

Where applicable, foreign entities that supply digital goods or services to customers in Indonesia are obliged to register for VAT. They must collect and account for VAT in the prescribed manner.

Indonesia’s digital services VAT initiative is in line with global trends. More countries are updating their VAT regulations to meet the demands of the digital economy. It is therefore critical that businesses supplying goods or services online get full clarity on their global obligations.

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