Indonesia: Adoption of regulation introducing electronic transaction tax on foreign digital service providers

The Indonesian Government adopted the Regulation in Lieu of Law Number 1 (Perppu 1/2020), concerning the State Financial Policy and Financial System Stability for Handling the Covid-19 Pandemic. The Regulation establishes an electronic transaction tax (ETT) that would apply to the sale of products over the internet through foreign digital services if a bilateral tax treaty prevented the application of the income tax connected to the company's “significant economic presence”. The details and implementation of this measure are delegated to subsequent government regulations.