Jakarta (VNA) – Indonesia began to impose a 10-percent value-added tax on sales by technology firms including Amazon, Netflix, Spotify andGoogle on July 7 in the context of the COVID-19 pandemic affecting the country’sstate finances.
In a statement, Indonesia’s tax office said ithad already assigned tax identification numbers to Amazon Web Services,Netflix, Spotify and Alphabet's Google for its Google Asia Pacific, GoogleIreland and Google LLC units.
Under the newrules, non-resident foreign firms that sell digital products and services inIndonesia worth at least 600 million rupiah (41,667 USD) a year or which generate yearly traffic from at least 12,000 userswill be required to pay the 10-percent VAT.
The tax office spokesman Hestu Yoga Saksama said that the tax office willcontinue to communicate with relevant businesses abroad, and that the number of companies assigned to apply VAT fordigital products will likely increase.
A Netflixspokesman said the company will complywith the new rule, while Amazon WebServices, Google, and Spotify did not immediately respond to requests forcomment, according to foreign media.
Indonesia expects a 13 percent yearly drop in state revenue thisyear as the pandemic hits business activity. Meanwhile, the nearly 50 billionUSD for the COVID-19 fight is forecast to more than triple its 2020 budgetdeficit.
Accordingto a study by Google, Temasek Holdings and Bain & Company, Indonesia, theworld'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 130billion USD by 2025./.
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The Indonesian Finance Ministry announced on July 3 that the country has raised 100 billion JPY (930 million USD) from the issuance of five-tranche Samurai bonds to offset the national budget deficit and fund the response to the COVID-19 pandemic.
