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