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 starting 1 August.
The tax on Netflix was announced on the same day that state-owned operator Telekomunikasi Indonesia announced it would stop blocking access to the streaming content platform.
Back in May, Indonesia announced plans to impose value-added taxes on sales of digital products and services for internet companies. The Asian country has set a 10 percent VAT on digital products sold by non-resident internet companies with a significant presence in the Indonesian market. Services that will be taxed include streaming, applications and digital games. Indonesian authorities previously said services by streaming platforms such as Spotify and Netflix would subjected to the new tax.
140 countries to rethink tax rules for internet giants
Around 140 countries from the Organisation for Economic Cooperation and Development (OECD) are currently negotiating the first major rewriting of tax rules to take better account of the growth of big tech companies such as Amazon, Facebook, Apple and Google that often book profit in low-tax countries.
Back in 2018, Indonesian finance minister Sri Mulyani Indrawati called on G-20 countries to make a joint effort to tax Google, Facebook, Twitter, Amazon, Uber, Lazada and Grab. According to the Indonesian minister, taxes should be paid by the companies based on economic significance, as opposed to based on decisions by the companies' central or branch offices. Therefore, she called for international cooperation to fight for the right for governments to collect fair taxes, particularly from tax evaders.
France also recently announced plans to impose a digital tax levy in 2020.
