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Indonesia govt moves up tax collection for digital services amidst COVID-19

Indonesia govt moves up tax collection for digital services amidst COVID-19

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The Indonesia government will be collecting tax from digital services earlier amid the COVID-19 impact on economic sectors. According to an article by Jakarta Globe, the move was initiated by president Joko Widodo to boost tax revenues as the country too battles economic slowdown. The digital taxes will be applied to foreign digital service providers in Indonesia. These include the likes of Netflix, Amazon Prime and Zoom, among others who are ramping up their presence in the country. 

In response to the digital taxes, finance minister Sri Mulyani Indrawati said that since the stay home notice issued by the government, several are utilising such global technology platforms which are booming growth, hence eligible to pay taxes. According to Indrawati, the new regulation on digital taxes by the government will provide a new definition on taxes to companies with economic in presence in the country. 

Implementation of digital taxes are a common sight in Southeast Asia countries recently. Early this year, the Singapore government too charged Goods and Services Tax (GST on 100 foreign digital players including Netflix, Spotify and Amazon. The Singapore government said the Overseas Vendor Registration (OVR) regime was aimed at achieving a level playing field in GST treatment for services, whether procured locally or overseas. 

While in Malaysia, Google announced that it will be adding on a 6% digital tax charge beginning 1 January 2020. Previously, the tax charge was only applicable to its Google G Suite account holders, which includes apps such as Gmail, Docs, Hangouts, Slides, Drive, and Calendar. According to Google, the amount of service tax charged will be reflected as a separate line in “Transactions” under “Billing and Payments”. It added that consumers’ invoice will show the amount of service tax charged.

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