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Indonesia to implement 10% digital services tax

Indonesia to implement 10% digital services tax

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Indonesia's Ministry of Finance will begin charging 10% value-added tax (VAT) on imported digital goods and services commencing 1 July. This covers video and music streaming subscriptions, The Jakarta Post reported, and is an effort to increase the country's revenue amidst the COVID-19 pandemic. 

Quoting the ministry, The Jakarta Post said music and film streaming subscriptions, online services from abroad, as well as digital applications and games will be covered under the regulation. These services will be accorded the same treatment as conventional products subjected to VAT and digital products produced by domestic businesses, it added. Providers of digital goods and services or their representatives appointed by the Finance Ministry's Taxation Directorate General will collect the tax from Indonesian consumers, reported The Jakarta Post. 

The Taxation Directorate General explained that the tax is an effort to construct a level playing field for all business players, especially between domestic and foreign players and conventional and digital businesses. In April, the Indonesian government said it will be collecting tax from digital services earlier and the 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. Indonesia follows in the footsteps of Singapore and Malaysia which implemented digital taxes earlier this year.

Related articles:
Digital service tax in Malaysia: Will agencies be saddled with this extra 6% burden?
Advertisers or consumers: Who will feel the tax pinch on consumer digital services?

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