Indonesia: PE status for applications, content services | KPMG | GLOBAL
Share with your friends

Indonesia: PE status for applications, content services provided via internet

Indonesia: PE status for applications, content services

The Director General of Taxes (DGT) issued guidance regarding the determination of a permanent establishment with respect to foreign taxpayers that provide application or content services via the internet.


Related content

The guidance—Circular Letter No. SE-04/PJ/2017—provides an explanation on the determination a permanent establishment (PE) according to the income tax laws and applicable income tax treaties. According to the income tax law, a PE is an establishment used by an individual person who does not reside in Indonesia, and is in Indonesia for not more than 183 days within 12 months; or an entity that is not established and not domiciled in Indonesia. A PE can be in the form of a branch company, representative office, office buildings, factories, workshops, warehouses, space for promotion and sales, mining extraction site, as well as computers, electronic agent, or automated equipment owned, leased, or used by the organizers of electronic transactions to conduct business via the internet.

Based on the guidance, taxation of a foreign taxpayer’s business profits originating from a treaty-partner country is based on the existence of a PE, and may be taxable in Indonesia if the business is conducted through a PT in Indonesia. 


Read a 2017 report [PDF 323 KB] prepared by the KPMG member firm in Indonesia

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us


Request for proposal