Southeast Asia’s Largest Economy Readies Digital Goods Tax Rule

Last updated: 4 Mar 2021  |  698 Views  | 

Southeast Asia’s Largest Economy Readies Digital Goods Tax Rule

Indonesia’s government is preparing a regulation to enable it to collect a 10% value-added tax on digital products from August, matching a similar levy already imposed on physical goods.

The rule will detail the range of products to be taxed and how the levies will be collected, according to a statement from Indonesia’s tax office. Subscriptions to film and music streaming services, purchases of online content and digital gaming are among the range of products and services that will be covered, the tax office said.

While Indonesia has been planning to tax digital companies for years as a way to boost revenue, spending on products such as Netflix and Zoom has “soared amid the Covid-19 outbreak,” Finance Minister Sri Mulyani Indrawati said earlier this year. Indonesia’s tax revenue dropped 3.1% annually in the January-April period as the contagion hit. The government has cut this year’s economic growth forecast to 2.3%, while warning that it may contract.

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