Significant changes under new laws

THE issuance of Law No. 11 of 2020 on Job Creation (commonly known as the Omnibus Law) and its implementing regulations, in particular Government Regulation No. 46 of 2021 on Postal, Telecommunication and Broadcasting (Regulation 46) and Presidential Regulation No. 10 of 2021 on Capital Investment Business Fields (commonly known as the Priority List), proposes significant regulatory changes to the technology and telecommunication sectors.

With the various liberalisation and investment incentives offered, the government expects to boost growth in these sectors, both encouraging local players as well as attracting foreign investors.

Prior to the issuance of the Omnibus Law, Regulation 46 and the Priority List, the Indonesian Government issued several regulations that include obligations and requirements for offshore electronic system operators that target Indonesia as their markets or as the regulations say, do business in Indonesia.

It started with the tax regulations on digital tax, under which the tax authority can appoint offshore electronic system operators as Indonesian Value Added Tax (VAT) collectors and requires them to collect VAT from Indonesian customers or users.

After the issuance of the digital tax regulations, the Indonesian Government issued:

• The e-commerce regulations, that is, Government Regulation No. 80 of 2019 on Trading Through Electronic Systems and Minister of Trade Regulation No. 50 of 2020 on Provisions on Business Licensing, Advertisement, Development and Supervision of Business Actors in Electronic Systems Trading (Regulation 50), which require certain offshore e-commerce operators to establish a local representative office in Indonesia.
• The private electronic system operator regulation, that is, Minister of Communication and Informatics No. 5 of 2020 on Private Electronic System Operators (Regulation 5), which requires certain offshore electronic system operators to register with the Ministry of Communication and Informatics.