Indonesia has announced the names of more technology firms that will be expected to apply a 10% Value added tax on sales to Indonesian customers. The country’s tax office informed that the list now includes Facebook, TikTok and Disney.
Indonesia had announced last month a 10% VAT on sales by technology firms including Netflix, Amazon, Google and Spotify. The decision was taken as increased remote work changed the spending pattern in the midst of the coronavirus pandemic that has hit government finances.
The additional companies announced on Friday include Tiktok Pte Ltd, three Facebook divisions, the Walt Disney Company (Southeast Asia) Pte Ltd, Apple Distribution International Ltd, and more of Amazon’s subsidiaries, including Alexa and Audible – the audiobook service.
While other companies declined to offer any comments, Facebook confirmed that they would comply with the directive.
A Facebook spokeswoman said, “In Indonesia, we will start collecting VAT as of September 1, 2020, as required under Indonesia regulations.”
Under the rules, foreign non-resident firms selling digital products and services in Indonesia worth at least $41,040 a year, or generating annual traffic from at least 12,000 users, must pay the 10% VAT.
Tech giants are steadily facing tougher fiscal regimes in Southeast Asia, including Thailand and the Philippines, where VAT of 7% and 12% was proposed by legislation and it is awaiting House approval.
In a note, the Indonesian tax office said it is continuing to identify other technology firms to notify them about the digital tax laws, adding that the number of firms subject to VAT would likely increase.
The VAT rules are aimed at ensuring a level playing field between international and local businesses as well as between traditional and digital businesses.
This year, Indonesia expects a 13% annual decline in state revenue as coronavirus disrupts business activity.
