JAKARTA • Indonesia has added more technology companies that will be obligated to apply 10 per cent value-added tax (VAT) on sales to Indonesian customers. The additions include Apple, Facebook, Disney and TikTok, the tax office said yesterday.
South-east Asia’s biggest country, with a population of nearly 270 million people, announced last month a 10 per cent VAT on sales by technology firms including Amazon, Netflix, Spotify and Google, as spending patterns shift with increased remote working amid the coronavirus pandemic, which has hit government finances.
The additional companies announced yesterday include three units of Facebook, TikTok, Apple, The Walt Disney Company, and more of Amazon’s subsidiaries, including its audiobook unit Audible and its voice assistant Alexa.
Facebook said the firm would comply. “In Indonesia, we will start collecting VAT as of Sept 1, 2020, as required under Indonesia regulations,” a Facebook spokesman said.
The other companies did not immediately respond to requests for comment.
Under the rules, non-resident foreign firms which sell digital products and services in Indonesia worth at least 600 million rupiah (S$56,200) a year, or which generate yearly traffic from at least 12,000 users, must pay the 10 per cent VAT.
Tech giants are increasingly facing tougher fiscal regimes in South-east Asia, including in Thailand and the Philippines, where legislation pending approval proposes VAT of 7 per cent and 12 per cent, respectively.
Indonesia’s tax office in a statement said it continues to identify other technology companies to inform them of the digital tax rules, adding that the number of firms subject to VAT would likely increase.
The VAT rules aim to create a level playing field between foreign and local companies and between conventional and digital businesses, it said.
Indonesia expects a 13 per cent annual drop in state revenue this year as the coronavirus disrupts business activity.