Indonesia imposes 10-percent VAT on foreign high-tech groups

Indonesia began to impose a 10-percent value-added tax on sales by technology firms including Amazon, Netflix, Spotify and Google on July 7 in the context of the COVID-19 pandemic affecting the country’s state finances.

08, Jul. 2020

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JAKARTA, VNA - Indonesia began to impose a 10-percent value-added tax on sales by technology firms including Amazon, Netflix, Spotify and Google on July 7 in the context of the COVID-19 pandemic affecting the country’s state finances.

In a statement, Indonesia’s tax office said it had already assigned tax identification numbers to Amazon Web Services, Netflix, Spotify and Alphabet's Google for its Google Asia Pacific, Google Ireland and Google LLC units.

Under the new rules, non-resident foreign firms that sell digital products and services in Indonesia worth at least 600 million rupiah (41,667 USD) a year or which generate yearly traffic from at least 12,000 users will be required to pay the 10-percent VAT.

The tax office spokesman Hestu Yoga Saksama said that the tax office will continue to communicate with relevant businesses abroad, and that the number of companies assigned to apply VAT for digital products will likely increase.

A Netflix spokesman said the company will comply with the new rule, while Amazon Web Services, Google, and Spotify did not immediately respond to requests for comment, according to foreign media.

Indonesia expects a 13 percent yearly drop in state revenue this year as the pandemic hits business activity. Meanwhile, the nearly 50 billion USD for the COVID-19 fight is forecast to more than triple its 2020 budget deficit.

According to a study by Google, Temasek Holdings and Bain & Company, Indonesia, the world's fourth most populous country with a population of nearly 270 million, is experiencing a boom in its digital economy which is expected to reach 130 billion USD by 2025. - VNA