In brief

On 20 September, the Indonesian House of Representatives approved Law No. 10 of 2020 on Stamp Duty (Bea Meterai) ("Stamp Duty Law"), which replaced Law No. 13 of 1985 ("Old Stamp Duty Law"). The Stamp Duty Law will come into effect on 1 January 2021.

Primarily, the Stamp Duty Law:

  • introduces the concept of an electronic stamp duty
  • broadens the scope of documents requiring stamp duty to include non-physical documents arising out of electronic transactions
  • increases the stamp duty fee to a fixed rate of IDR 10,000 (approximately USD 0.6) per document

By implementing these changes, the Indonesian government hopes to boost the State's income and align the stamp duty provisions with the current shift to digital documentation.


Contents

  1. Key Changes
  2. Transition period
  3. Further implications

Key Changes

The Stamp Duty Law introduces changes to the form and applicability of stamp duty. Failure to pay the applicable stamp duty does not render an agreement or document invalid.

The following are key changes in the Stamp Duty Law:

  • Form: Aside from the paper duty stamps widely distributed today, the Stamp Duty Law introduces the concept of electronic stamp duty.

We understand that the tax authorities will further regulate the technicalities of this electronic duty stamp, which will involve the issuance of a unique code, through a separate ministerial regulation.

  • Applicability:
    • Types of documents: The Stamp Duty Law broadly covers documents concerning civil matters (e.g., securities transaction documents, documents stating an amount of money of IDR 5 million), and documents that need to be submitted as evidence before a court of law. "Documents" now include all forms of physical and electronic forms of writing.
    • Monetary threshold: Documents that confirm (i) the receipt of money or (ii) an acknowledgment of debt or debt repayment with an amount of less than IDR 5 million are now exempted from stamp duty fees.
    • Further Exemptions: Documents entered into (i) for land or building transfers as part of a natural disaster mitigation process, (ii) for non-commercial religious or social reasons, (iii) to enact government policies in the monetary and financial services sector, and (iv) to implement international treaties, are exempt from stamp duty fees.
  • Payer: The Stamp Duty Law further clarifies who must pay the stamp duty fees for each type of document.

Document Type

Payer

Documents made unilaterally

The party receiving the document

Documents made by two or more parties

Each party bears the stamp duty for the counterpart of the document it receives

Securities (surat berharga)

The party issuing the securities

Evidence presented before a court

The party presenting the evidence

Documents entered into abroad and used in Indonesia (e.g., agreements involving foreign parties)

The party benefiting from the document

We note that the parties may set aside the provisions above by mutually agreeing upon the appropriate Payee.

  • Due and Payable: The Stamp Duty Law further clarifies when the stamp duty fees become payable for each type of document.

Document Type

Stamp Duty Payable When

Agreements, notarial deeds, and deeds made before land officials

The document is signed.

Securities (surat berharga) and securities transaction documents

The document is made (e.g., for securities' trade confirmation, when the confirmation is issued by the relevant system)

Statement letters, auction documents, documents confirming (i) the receipt of money or (ii) an acknowledgment of debt or debt repayment

The document is handed over to the party for whom the document is made.

Evidence presented before a court

The document is presented.

Documents entered into abroad and used in Indonesia (e.g., agreements involving foreign parties)

The document is used in Indonesia (e.g., for facility agreements signed abroad, when used in Indonesia as (i) a basis to request a repayment of debt, (ii) a basis for a record-keeping entry, or (iii) for an attachment in a report.)

 

Transition period

The Stamp Duty Law is not applicable to all documents made prior to 1 January 2021; in this case, the Old Stamp Duty Law applies.

All physical duty stamps printed under the Old Stamp Duty Law can still be used until 1 January 2022 by affixing multiple stamps until the value amounts to at least IDR 9,000 (instead of the required IDR 10,000), but these stamps can not be sold or traded in any form after 1 January 2021.

Further implications

The following issues may arise following the implementation of the Stamp Duty Law:

  • E-commerce transactions: We understand from statements made by government officials in the media that digital stamp duty is intended to also cover e-commerce transaction documents (e.g., receipts) with an amount exceeding IDR 5 million. Based on the Stamp Duty Law, parties are free to agree on who pays the stamp duty fee. Arguably, by default the party that pays stamp duty for documents made unilaterally such as receipts will be the recipient of the document (i.e., the customer). E-commerce operators should notify their customers of this fee in advance of a transaction to avoid complaints of overcharging. Operators must also be aware of the possibility that the tax authorities will attempt to collect stamp duty from them unless it is clearly stipulated with the customer that the customer will pay all stamp duty arising out of their transactions.
  • Signing agreements outside Indonesia: The approach for agreements that are signed abroad remains the same as that under the Old Stamp Duty Law. As Indonesian duty stamps are not sold abroad, these documents should ideally be stamped in Indonesia prior to usage.

The implementing regulation on post-stamping has not been updated since 2014, and hence digital post-stamping is not yet possible. Until there is a new implementing regulation on that, post-stamping will continue to involve affixing paper documents with a physical duty stamp and paying an additional administrative fine of IDR 10,000 at a post office. Agreements remain equally valid if the stamp duty is not paid, but post-stamping enables the original document to be presented before an Indonesian court as evidence, if the need arises.