Stamp Duty in Indonesia: New Law in Effect
On January 1, 2021, Indonesia’s Law No. 10 of 2020 on Stamp Duty (the “Law”) came into effect, replacing the previous stamp duty law from 1985. The Law introduces a standard tax rate of 10,000 rupiah (US$0.70) and introduces a new electronic stamp duty system.
Individuals, companies, and other organizations in Indonesia must pay stamp duties on certain legal documents. Stamp duty is a one-time tax that applies to civil documents and other documents used as evidence in legal proceedings.
Previously, stamp duty was either 3,000 rupiah (US$0.20), 6,000 rupiah (US$0.40), or a combination of these rates. While the law became effective at the start of 2021, the Indonesian government has given payers a transition period to use stamp duties already in circulation until the end of the year, with a minimum payment of 9,000 rupiah (US$0.60) per document.
The cost of stamp duty is minimal but paying stamp duty is a necessary procedure for numerous business and legal documents. Accordingly, companies operating in Indonesia must familiarize themselves with when stamp duty must be paid.
What documents require stamp duty?
Indonesia requires stamp duties on two main types of documents: documents created to explain events of a civil nature and documents to be used as evidence in a court of law.
Documents of a civil nature include the following:
- Agreements, certificates, statement letters, and similar documents and their copies;
- Notarial deeds and executorial deeds (grosse) and their copies;
- Deeds made before a land deed officer (also known as a land conveyance officer) and their copies;
- Securities in any form and name; and
- Documents stating a sum of money above 5,000,000 rupiah (US$350), which describe the receipt of money or contain an acknowledgment of debt payment or settlement, either entirely or partially.
In addition to these documents, the Law also applies to the following civil documents not covered by the previous law:
- Securities transaction documents, including futures contract transactions in any name or form;
- Auction documents in the form of excerpts, minutes, copies, and minutes of auction executorial deeds (grosse); and
- Other documents stipulated by Government Regulation.
The Law exempts the following documents from stamp duty:
- Land transfer and building rights documents used for handling and restoring social conditions following natural disasters;
- Land transfer and building rights documents used solely for religious or non-commercial activities;
- Documents relating to the implementation of government programs and monetary or financial policies; and
- Documents relating to the implementation of international agreements under binding international treaties or reciprocal laws.
In addition to these exemptions, stamp duty does not apply to numerous other documents. These include documents relating to the traffic of people and goods (such as a bill of lading or receipt of delivery), diplomas, salary payments, tax receipts, and many others.
When does stamp duty need to be paid?
Stamp duty must be paid at different times, depending on the type of document:
- Agreements, contracts, deeds, etc. – payable upon signing.
- Securities-related documents – payable upon issuance.
- Auction documents, documents acknowledging debt repayment, or stating a sum of money above 5,000,000 rupiah (US$350) – payable upon issuance to whom the document was made for.
- Documents to be used as evidence in court – payable upon submission to the court.
Those who use a stamp duty can pay for an affixed stamp, also known as a sticky stamp, or pay through a tax payment certificate known as surat setoran pajak. An affixed stamp carries the state symbol, the phrase “Meterai Tempel”, and states its value. Tax payment certificates are an efficient means to pay stamp duties for large documents so that a stamp does not need to be affixed to each page.
According to the Law, companies can designate a Stamp Duty Collector responsible for collecting, remitting, and reporting stamp duties to the Directorate General of Taxes. Further details on the role of Stamp Duty Collector will be described in forthcoming regulations.
How does electronic stamp duty work?
The Law includes provisions for managing stamp duties on electronic documents for the first time. Electronic stamps, which carry a unique code and description, will apply to electronic transaction documents with a value above 5,000,000 rupiah (US$350).
The Indonesian government, however, is still building the infrastructure to manage electronic stamp duties. Accordingly, while the government has established the legal basis for electronic stamp duties, they have not yet been implemented in practice.
Once the electronic stamp duty system is established, further details on how authorities will manage their issuance and payments will be announced in kind.
Establish processes for paying stamp duties
Paying stamp duties is a simple but necessary step for issuing many kinds of business and legal documents. Failure to pay stamp duties could expose companies to challenges in court or in facilitating other legal arrangements.
Accordingly, companies are recommended to establish internal procedures to ensure that the payment of stamp duties is not missed when creating or receiving documents, thereby avoiding unnecessary complications.
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