Jakarta. Indonesia will start collecting tax from digital services, including popular cloud meeting app Zoom and streaming service Netflix, after a decree enacted by President Joko "Jokowi" Widodo on Tuesday granted the tax office the power to boost tax revenues during the country's pandemic-induced economic slowdown.
Initially, the tax collection was made part of the omnibus bill on taxation set to be passed into law by the House of Representatives later this year.
But the Covid-19 pandemic has forced the government to start collecting taxes in the digital realm sooner than planned, Finance Minister Sri Mulyani Indrawati said on Wednesday.
"We included the tax on electronic transactions in the Perppu," Sri Mulyani said on Wednesday, referring to the government regulation in lieu of law that was signed and enacted by President Jokowi earlier this week.
"There has been a big shift to electronic [platforms] during this pandemic, since people are staying at home more. Even today we're using Zoom," Sri Mulyani said during a teleconference on the cloud meeting app designed by a San Jose-based company with the same name.
The minister said companies like Zoom, which don't have a representative office in Indonesia but are doing big business in the country, will have to pay local taxes.
They include streaming services like Netflix and Amazon Prime, which have been doing roaring business during the pandemic as people observe physical distancing and spend most of their time at home.
"We can use [the Perppu] to collect [value added taxes] on intangible imported goods and foreign platform services," Sri Mulyani said.
She said the new regulation offers a new definition of tax subject as anyone with a significant economic presence in the country.
Under the previous tax code, Indonesia can only tax companies that register their domicile within the country's territory.