Higher Netflix bill? Indonesia to charge VAT on imported digital goods, services starting July

JAKARTA — Indonesia’s Finance Ministry will start charging 10 percent value-added tax (VAT) on imported digital goods and services, which includes video and music streaming subscriptions, starting from July 1 in an attempt to boost state revenue amid the COVID-19 outbreak.

According to Finance Ministerial Regulation No. 48/2020, the tax will be collected from customers by the digital goods and services providers or their representatives in Indonesia that will be appointed by the ministry’s Taxation Directorate General.

“The regulation will apply to music and film streaming subscriptions, digital applications and games as well as online services from abroad. They will receive the same treatment as conventional products subjected to VAT as well as similar digital products produced by domestic businesses,” the directorate general wrote in a statement published on Friday.

“[The tax] is one of the government’s efforts to create a level playing field for all business players, especially between domestic and foreign players as well as conventional and digital businesses.”

The ministry will appoint providers that have passed a certain transaction value or amount of traffic to collect the VAT for their goods and services. Meanwhile, companies that have met the transaction requirement but have not been appointed were also urged to notify the authorities.

The ministerial regulation is a follow-up to a government regulation in lieu of law issued on March 31 that aims to support the government’s efforts to fight the adverse economic impacts of the COVID-19 pandemic.

Previously, Finance Minister Sri Mulyani Indrawati said companies such as streaming service Netflix and online meeting app Zoom were a few examples of foreign businesses with a significant economic presence in the country that would be subjected to the tax.