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After the approval from the Indonesian House of Representatives (Dewan Perwakilan Rakyat or "DPR") on 29 September 2020, the Draft Law on Stamp Duty has finally been enacted on 26 October 2020 and numbered as Law No 10 of 2020 on Stamp Duty (“Stamp Duty Law”). Minister of Finance, Sri Mulyani Indrawati, mentioned that the previous law on stamp duty,[1] which had never undergone any amendments for 34 years, is considered to be outdated and unable to cope with the recent development. Thus, the updated Stamp Duty Law is established as an adjustment to the existing stamp duty policies to the current economic, social and information technology conditions that have massively evolved through the past three decades, whilst maintaining the principles of simplicity, efficiency, justice, legal certainty and utility.
Below are some noteworthy amendments:
Given the technological advances, we are now shifting into a paperless community where documents are not necessarily printed or signed on paper anymore. This paperless principle causes the stamp duty unable to cope with this technological advancement, keeping in mind that the existing stamp duty is only available for printed versions. To solve this issue, the Stamp Duty Law introduces digital stamps for electronic documents so that stamp duty-required electronic documents would have the same legal standing as those stamp duty-required paper documents.
Stamp Duty Law provides a new list of documents required to be affixed with stamp duties and are exempted from the obligation to be affixed with stamp duties. Moreover, Stamp Duty Law also provides regulation on the parties who should pay for the withholding tax of stamp duty for the documents that are required to be affixed with stamp duty.
The Stamp Duty Law also sets forth the time for a stamp duty to be due and payable for each document that is obliged to be affixed with a stamp duty. These provisions are meant to provide legal equality for the stamp duty affixation for the printed documents and electronic documents, and gives legal certainty for the parties who are supposed to make the payment for the stamp duty.
Through the new Stamp Duty Law, the Government has simplified the Indonesia Stamp Duty system by superseding the IDR 3,000 stamp duty and IDR 6,000 stamp duty into one IDR 10,000 stamp duty. This nominal increase also comes with consequences that the documents required to be affixed with this stamp duty are those that stated a certain amount of money with a minimum value of IDR 5 million. The increase of stamp duty nominal is intended to boost the state revenue collection and at the same time serve as a form of the Government’s support for the expansion of small and medium enterprises in Indonesia as in accordance with the new criteria of the documents required to be affixed with the stamp duty - there will be fewer documents required to be affixed with IDR 10,000 stamp duty.
However, with the issuance of this IDR 10,000 stamp duty, the stamp duties that are issued under Law No 13 of 1985 on Stamp Duty will still be valid until the first anniversary of the enactment of Stamp Duty Law.
Stamp Duty Law provides exemptions for stamp duty obligations in regards to the documents required to be affixed with stamp duty. Those documents include documents, including but are not limited to, necessary to handle natural disasters, related to religious and social activities and in regards to support Government’s programs or to perform international agreements.
The adjustment for the new stamp duty law also includes the additional activities that may be imposed with administrative sanctions, which includes events where the required documents are not affixed with the appropriate stamp duty or if the document has been affixed with stamp duty but the parties have not made enough payment for the stamp duty. Note however, the administrative sanction amount is less than half compared to previous regulations.
However, although some believed that it is best to enact this regulation as soon as possible, due to the Corona Virus 2019 (“Covid-19”) pandemic situation, the Government and the DPR have agreed to enforce the Law on Stamp Duty on 1 January 2021. This is due to the Government comprehension that the public and numerous business sectors are currently experiencing great economical pressure due to this Covid-19 outbreak. This interval is hoped to be able to give enough time to slowly introduce the stamp duty amendment to the public and to prepare necessary facilities to implement the new stamp duty law.
[1] Law No 13 of 1985 on Stamp Duty.
