Twitter and Zoom required to pay 10% VAT in Indonesia

Twitter and Zoom are now required by the Indonesian government to pay a 10% value-added tax (VAT) on sales. They are among the 12 additional companies mandated by the government to pay the VAT, joining the existing list of companies including Netflix, Google and Facebook, Reuters reported.

The other companies recently added to the list were LinkedIn, Skype, McAfee Ireland, Microsoft Ireland, Mojang AB, Novi Digital Entertainment, PCCW Vuclip, Shopee Indonesia and Jingdong Indonesia, Reuters reported. Beginning 1 October, the companies must start charging VAT to advertisers. Marketing Interactive has reached out to the companies for comment.

Zoom's spokesperson told Marketing Interactive in a statement that like many companies with a growing international presence, Zoom is routinely evaluating its indirect tax collection and remittance obligations. "The application of these taxes to businesses with online activities is a complex and evolving area. Zoom continues to review such developments, as well as the nature and extent of its activities in different jurisdictions, and based on such regular review will from time to time start charging indirect taxes where applicable," the spokesperson said. 

Meanwhile, Twitter is aware that many countries, including Indonesia, are discussing and thinking about how to ensure their digital tax environments are fit for purpose. The company said it is monitoring developments closely and that it is also tax compliant in the jurisdictions in which it operates. In general, the company said these proposals are targeting other entities in the market more than Twitter. According to Twitter, it wants to make sure there is consistency and coordination across taxing entities --to avoid double-taxation scenarios. 

In May this year, Indonesia's Ministry of Finance said the 10% VAT is an effort to increase the country's revenue amidst the COVID-19 pandemic, The Jakarta Post previously reported. The move is also an effort to level the playing field for all businesses, especially between domestic and foreign players and conventional and digital firms. Music and film streaming subscriptions, online services from abroad, as well as digital applications and games will be covered under the regulation.

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