Indonesia has made good on its promise to introduce a digital services tax by including four tech titans – but six entities – in its value added tax (VAT) scheme.
The nation on Tuesday posted news that the following entities are now to collect VAT:
- Amazon Web Services Inc.
- Google Asia Pacific Pte. Ltd.
- Google Ireland Ltd.
- Google LLC.
- Netflix International BV
- Spotify AB.
The abovementioned companies will be required to collect ten percent tax on top of their charges and remit those sums to Indonesia’s Direktorat Jenderal Pajak (aka the Directorate General of Taxes). The 10 percent rate is the same rate of Indonesia’s VAT on other goods and services and the four companies will be required to collect it from August 1st 2020 and onwards.
It’s notable that Indonesia has named three Google entities as tax targets: The Register has inquired if all three were named because they each deliver different services and therefore need to be taxed individually or because Indonesia wanted to make sure Google couldn’t escape its obligations. The absence of any Microsoft entities also seems noteworthy.
Indonesia openly floated its digital services tax as a post-pandemic coffers-filler. Other nations pursuing similar goals suggested them as a way to ensure vendors pay tax in nations where they earn revenue even if operating digitally means companies can legally claim their activities take place in tax-friendly jurisdictions.
In what appears to be a co-incidence, news that Netflix was to be taxed came on the same day that state-owned telco PT Telekomunikasi Indonesia announced it would stop blocking the streaming content giant. As the carrier has over 100 million clients, The Register expects it won’t be long before we can all sample some of whatever it is that Indonesian audiences like to watch on the telly. ®