Govt Imposes New Tax on Digital Services Such as Netflix, Spotify

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Markus Wisnu Murti

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  • President Joko Widodo, accompanied by Finance Minister Sri Mulyani, joins the virtual Extraordinary G20 Leaders' Summit at the Bogor Palace, Thursday, March 26, 2020. Photo: Presidential Secretariat Press Bureau/Muchlis Jr

    President Joko Widodo, accompanied by Finance Minister Sri Mulyani, joins the virtual Extraordinary G20 Leaders' Summit at the Bogor Palace, Thursday, March 26, 2020. Photo: Presidential Secretariat Press Bureau/Muchlis Jr

    TEMPO.CO, Jakarta - The Finance Ministry’s directorate-general of taxation announced it would start to charge a 10 percent value-added tax (PPN) on imported digital services and products starting July 1 this year. This basically means Netflix, Spotify, and Zoom customers will be charged with an additional 10 percent tax in order to use their services.

    Tax DG spokesperson Hestu Yoga Saksama said Friday that the foreign digital product service providers would be categorized under electronics systems trade (PMSE) businesses. 

    “The foreign and domestic service providers or organizers that are appointed by the Finance Ministry under the tax DG can start to collect the value-added tax,” said Hestu in Friday’s press release. 

    The decision to impose the tax is part of the Indonesian government’s attempt to create a level playing field for local and international digital service providers and the conventional ones. 

    The tax will be imposed on products such as movies and music streaming services, mobile apps, games, and online service providers. The digital services will now be faced with the same tax that has been imposed on conventional businesses. 

    The PMSE businesses that fit certain transactional values and traffic within the period of 12 months will be appointed by the Tax DG. Meanwhile, businesses that fit the criteria but have yet to be appointed by the government are welcomed to notify the Tax DG. 

    The details of this tax mechanism is overseen under the Finance Ministry’s Regulation No.48/PMK.03/2020, which can be accessed online at www.pajak.go.id. The government insists that the taxes generated from the digital industry, especially foreign products, would be used to overcome the economic effect of the COVID-19 pandemic. 

    ANTARA