Tax flash November 2019

1. TAX FLASH
“Digital economy should
not forget the best inter-
est of each and every
people. No one should
be left behind.”
- President Joko Widodo at G20
Summit in Osaka, Japan,
28 June 2019
In This Issue
• Digital 2019 Spot-
light
• Palapa Unifies
Nusantara
• E-Commerce Tax
(DJP)
• KIB Highlight Ser-
vice: Tax Diagnostic
Review (TDR)
• KIB New Branch
Office
• Our Involvement
SEA Internet Economy (GMV, $ B)
“Dominating the SEA E-conomy”
Home to 150 million internet users and 355 mil-
lion mobile subscriptions, the world would por-
tray Indonesia as the biggest if not yet the lead-
er in SEA digital economy.
While there is a high level of interest from governments,
businesses, and individuals in the region to support the
growth of the digital economy and maximize its benefits,
still there are signs that despite the rapid growth in the re-
gion, many gaps remain that must be addressed if the digi-
tal economy is to achieve its potential.
KIB E-newsletter Nov 2019
Indonesia is the largest and fastest growing internet
economy in the region at $40B @49% CAGR
Source: Google Temasek Bain & Company

2. Digital 2019 Spotlight
Indonesia has the highest rate of e-commerce use of any
country in the world.
Key Points:
1. With 90% of the country’s internet users between the ages of 16—64
reporting that they already buy products and services online.
2. Despite these high levels of use, the overall value of the e-commerce
market in Indonesia remains relatively low. Statista reports that the av-
erage Indonesian e-commerce shopper spent just US$ 89 on online
consumer goods purchases in 2018, this figure does not include spend
on travel or digital media.
“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the
most adaptable to change”
-Charles Darwin
Searched
Online for a
product or
service to buy
Visited an
Online Retail
Store or Site
(any device)
Purchased a
product or ser-
vice online
(any device)
Made an
Online Pur-
chase via a
laptop or desk-
top computer
Made an
Online Pur-
chase via a
mobile phone
96% 91% 90% 29% 79%
Percentage of internet users aged 16 to 64 who report performing each activity in the past month
(survey based) Source: Hootsuite ;We are social

3. Digital 2019 Spotlight
“As CEO, my main job is editor-in-chief”
- Jack Dorsey
Non-automotive retail sales contribution
to GDP (price based)
Retail Online Sales Growth
(US$ billion)
Source: BPSSource: CLSA
Source: CLSA

4. Digital 2019 Spotlight
“Customers should be # 1, Employees # 2, and then only your Shareholders come at # 3”
- Jack Ma
Source: CLSA
Indonesia E-commerce
Market Share 2019
Population
Internet
Users
Social Me-
dia Users
Mobile
Subscrip-
tions
Mobile Social
Users
268.2 150.0 150.0 355.5 130.0
69.24 57.00 51.00 92.33 49.00
96.96 64.00 62.00 143.30 58.00
5.83 4.92 4.60 8.37 4.20
107.3 76.0 76.0 124.2 72.0
32.25 25.28 25.00 40.24 24.00
Country
Indonesia
Thailand
Vietnam
Singapore
Philippines
Malaysia

5. Digital 2019 Spotlight
E-commerce in Indonesia.
Key Points:
1. Indonesia spends US$20.3 billion online in 2018, an increase of
US$3.3 billion—or 20 percent—compared to 2017.
2. The figure included US$9.5 billion online purchases of consumer
goods like fashion, electronics, and groceries, while US$9.4 billion
went to online travel purchases.
3. The remaining US$1.4 billion went on digital media purchases, of
which the lion’s share – US$850 million—went on video games.
4. Despite this strong growth, research firm IGD reports that online shop-
ping will still account for less than 2 percent of Indonesia’s total gro-
cery spend by 2022.
“Our movements and feelings are constantly monitored, because surveillance is the business model of the digital
age”
-Katharine Viner
Annual change in the total amount spent on consumer E-Commerce Category. Homegrown e-
commerce unicorn Tokopedia tops SimilarWeb’s rankings of transactional websites in Indonesia, with
the platform’s website attracting an average of roughly 125 million visits every month. A local player
dominates Indonesia’s online travel sector, with Traveloka attracting an average of 38 million visits per
month over the past 3 months. Source: Hootsuite ;We are social
Fashion &
Beauty
Electronics
& Physical
Media
Food &
Personal
Care
Toys, DIY
& Hobbies
Travel
(Including
accommoda-
tion)
Digital
Music
+18% +24% +30% +25% +17% +8.2%
E-commerce Growth By Category

6. The Internet Unifies
The Palapa Ring that unites Nusantara
Key Points:
1. Launched on Oct 14, 2019, the Rp. 21.63 trillion (US$1.5 billion) the broadband
infrastructure helped fulfill one of Patih Gajah Mada’s goals.
2. The Palapa Ring shall unify Indonesian to the outermost parts of the country —
fiber optic infrastructure that spans 36,000 km.
3. Connecting the previously uncovered 5.8 million citizens in 57 cities and regen-
cies using 12,148 kilometers of fiber optic cable and 55 microwave link hops.
4. With greater internet connectivity, we have high hopes in The Palapa Ring to
balancing and strengthening the digital economy and the nation’s security.
He, Gajah Mada Patih Amangkubumi, does not wish to cease his fasting. Gajah Mada: “If (I succeed) in defeating
(conquering) Nusantara, (then) I will break my fast. If Gurun, Seram, Tanjung Pura, Haru, Pahang, Dompo, Bali,
Sunda, Palembang, Temasek, are all defeated, (then) I will break my fast.”
- Gajah Mada

7. E-commerce
E-commerce Taxation
“People who complain about taxes can be divided into two classes: men and women”
-Anonymous
Income Tax (PPh Pajak Penghasilan)
● Object = income derived from goods and services sold online
● Subject = Individual Tax Payer / Corporate Tax Payer who receives income from online transac"on.
● Type of payable tax = Ar"cle 4(1) jo (2), Ar"cle 15, Ar"cle 17, 21, 22, 23 and 26
SE—62/PJ/2013 reaffirms the following 4 models of e-commerce transaction:
1. Online Marketplace
2. Classified Ads
3. Daily Deals
4. Online Shopping
Value-Added Tax (PPN Pajak Pertambahan Nilai)
● Object
The ac"vity of delivering taxable goods (BKP Barang Kena Pajak) or taxable services
(JKP Jasa Kena Pajak) within the custom and excise territorial where the online transact-
"on is being held.
● Tax Basis (DPP Dasar Pengenaan Pajak) = sales price, exchange value, and export value,
including applicable delivery/shipping costs and insurances. An exemp"on applies to a
PPN being withheld and discount as shown on the tax invoice.
● The date shown on a tax invoice = the date of PPN becomes payable.
● Referring to online payment method, payable PPN is classified into two categories :
√ Cash on delivery, PPN becomes payable when BKP or JKP was handed over or delivered
to the buyer
√ Non-cash on delivery, PPN becomes payable on the same date as recorded when
payment was made by the buyer

8. E-commerce
PMK No.210/PMK.010/2018
“People who complain about taxes can be divided into two classes: men and women”
-Anonymous
The Minister of Finance Regulation (PMK) was meant to acquire real information
from businesses / entrepreneurs.
● It implied to an assumption, that e-commerce businesses/ subjects are not a
compliant tax payer.
● Had held against the self-assessment principle —the basic principle of taxation
● Indicated weaknesses in the DGT’s database and administration system
Reflection Note
√ Having missed undertood of the existing Tax Law and regulations (UU KUP),
Income Tax (PPh), and Value-Added Tax (PPN), when the PMK was drafted.
√ The regulator (government) needs to collaborate with e-commerce businesses
and adapt with the digital economy ecosystem. This will allow the regulator to
better understand what the subjects / business needs, and eventually able to
draft the best suited new fiscal policy.

9. E-commerce Tax
Omnibus Law
“C but in this world nothing, can be said to be certain, except death and taxes.”
- Benjamin Franklin
A definition by duhaime.org:
A draft law before a legislature
which contains more than one
substantive matter, or several
minor matters which have been
combined into one bill, ostensibly
for the sake of convenience.
No. Subject Currently Enforced Draft Law
a
VAT withholding & pay-
ment typically due on
events involving import of
intangible goods and ser-
vices
Being done by the con-
sumer (party who is doing
the import), domestically—
providing the SPP (Tax
Payment Slip)
Referring:
1. SPLN (Foreign Tax Payer) -
Foreign trader, services, and
platform - to withhold, pay, and
submit report on VAT.
2. SPLN to appoint its representa-
tive in Indonesia to withhold, pay,
and submit report on VAT on
behalf of the SPLN.
b
Taxable income of transac-
tion being done electroni-
cally in Indonesia by SPLN
without having physically
presence in Indonesia
None
a. To regulate definition of BUT
(permanent establishment) that is
not only referred on its physical
presence, but also it should be
based on its significant economic
presence.
b. Tax Tariff and taxable income will
be based on the constituted tax
income law.

10. Our Services
Tax Diagnostic Review
“ You can’t tax business. Business doesn’t pay taxes, it collects taxes”
- Ronald Reagan
Assessment Result Review Recommendation
• Understanding the
business process
• Itemize type of
taxes and obliga-
tions involved
• Going over busi-
ness book keep-
ing, admin, and tax
compliance
• Potential Tax
Liabilities
• Book keeping error
• Financial State-
ment misrepresen-
tation
• Book keeping ad-
justment
• Tax return correc-
tion
• Prepare support-
ing documents
• Communication
with related par-
ties

11. KIB New Branch Office
“KIB = Kita Itu Bisa”
-Bambang Suwarso
We are pleased to announce
the opening of our new branch
office at Gold Coast, Pantai
Indah Kapuk, North Jakarta on
Tuesday, October 29, 2019.
KIB Consulting is committed to
better serve our clients
exclusively and professionally.
Gold Coast
Eiffel Tower 12th Fl.
Unit N
Pantai Indah Kapuk
North Jakarta -144550

12. Our Involvement
At izincoid Tax Talk Oct 24, 2019
Coordination meeting at The Ministry of Trade on Trade Mission to Brazil, Chile, Korea, and
Taiwan

13. Our Involvement
South and Southeast Asian Business Leaders, Chengdu, China, Sep 18, 2019

14. Our Involvement
Apindo— RMB Internationalization: Prospect and Challenges to Indonesian Market,
27 August 2019

15. Tunnel of Củ Chi , Ho Chi Minh (Saigon), Vietnam
Contact Us
Phone:
(62-21) 2929 5870-73
Bambang B. Suwarso
bambang.suwarso@kib-
consulting.com
Rachmat Kurniawan
rachmat@kib-
consulting.com
Yosefine Amelia
yosefine@kib-
consulting.com
Raden Roro Ratna
Indah Wulandari
wulan@kib-
consulting.com
Addresses:
North Jakarta —144550 Indonesia
The Koppel Building Suite IB.
Jalan Pluit Selatan Raya no. 10
Gold Coast Tower Eiffel Unit N
Pantai Indah Kapuk
www.kib-consulting.com
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publication are for information purposes only, and
are not necessary and/or must not be relied upon
as being to those of the publisher or of the institu-
tions for which the contributing authors work.
Although every part of content has been taken to
ensure the accuracy of the information contained
within this publication, it should not be by any
person relied upon as the basis for taking any
action or making any decision.
KIB Consulting and its representative, cannot be
held liable or otherwise be responsible in anyway
for any advice, action taken or decision made on
the basis of the facts, surveys, and opinions stated
or expressed within this publication.
KIB goes to Vietnam, October 18—21, 2019; In front of The
Presidential Palace, Hanoi, Vietnam
KIB Outing