Starting August, Netflix Et Al Subscription Costs Increase 10 Percent

JAKARTA - The government officially applies a value added tax (VAT) regulation for digital business actors in Indonesia. This means that starting next month, the cost of subscribing to Netflix and Spotify is expected to increase due to a tax of 10 percent.

Apart from Netflix and Spotify, there are four other companies that are also subject to tax, namely Amazon Web Services Inc, Google Asia Pacific Pte Ltd, Google Ireland Ltd, and Google LLC.

"With this new regulation, digital products and services sold by the six business actors will be subject to VAT starting August 1, 2020," said the Director of Service and Public Relations of the Directorate General of Taxes (DJP), Hestu Yoga Saksama in his official statement, Thursday 9. July.

The basis for this tax collection is the Minister of Finance Regulation (PMK) number 48 of 2020 concerning procedures for appointing collectors, collecting and depositing, as well as VAT tax reporting. Where this rule has come into effect since July 1, 2020.

"The amount of VAT that the buyer must pay is 10 percent of the price before tax, and must be stated on the receipt or receipt issued by the seller as proof of paying VAT," he continued.

Not only Netflix and Spotify, a 10 percent VAT withdrawal will also be applied to digital game distribution service, Steam. It is likely that this provision refers to the VAT regulation in Indonesia, for all digital product and service purchase transactions.

VAT to be paid to foreign business actors on the purchase of goods or services used in business activities can be claimed as input tax by taxable entrepreneurs. So services or digital goods originating from abroad or the customs area will be considered the same as physical goods subject to tax.

Tax deposit procedures for digital companies are simplified and are contained in the Director General of Taxes Regulation Number PER-12 / PJ / 2020. Meanwhile, to be able to credit input tax, the taxable entrepreneur must notify the seller with the name and NPWP to be attached to the VAT collection in order to qualify as a document equivalent to a tax invoice.