Music, Movie Streaming to be Taxable Starting July 1

TEMPO.CO, Jakarta - The Indonesian government is set to officially charge a 10-percent value-added tax (VAT) for the purchase of digital products and services from providers categorized in electronics systems trade (PMSE) starting July 1, 2020.

“The tax applies to both foreign and domestic transactions that have reached certain transactional value or traffic and access within 12 months,” the Finance Ministry noted as quoted from the Cabinet Secretary’s page setkab.go.id on Thursday, May 28.

With the policy, digital products such as music and movie online streaming platforms, apps, online games, and other online services from abroad that have significant economic value and have gained economic benefit from Indonesia through its transactions will be treated the same as conventional products or similar digital products in the country.

This means, Netflix, Spotify, and Zoom customers will be charged with an additional 10 percent tax to use their services.

The Finance Ministry said his policy was part of the government's efforts to create justice and business equality for all business sectors, both conventional and digital.

Additionally, the regulation is carried out to implement Article 6 (13a) of Government Regulation No. 1/2020 concerning state financial policy and stability to deal with Covid-19, in which the government passed a Finance Ministerial Decree No. 48/PMK.03/2020 as a derivative rule.

Digital tax enactment is also expected to increase the state revenue in order to cope with the impact of the pandemic and maintain the country's financial credibility and stability amid the global crisis.

CAESAR AKBAR