JAKARTA - The government has agreed not to withdraw Income Tax (PPh) from US-based digital service providers. This decision is recorded in the Agreement on Reciprocal Trade (ART) which has just been signed.
The trade agreement was inaugurated by President Prabowo Subianto and US President Donald Trump after the second bilateral meeting held in Washington DC. The meeting was held on Thursday, February 19.
With the creation of this agreement, popular US digital services in Indonesia can operate without the burden of digital services tax. Some of these companies include Google, Netflix, and Meta, which oversees the Instagram and Facebook platforms.
In the official ART document, it is emphasized that Indonesia is prohibited from imposing tax rules that discriminate against US companies. This prohibition includes policies in the form of written laws and field practices that target the digital sector.
"Indonesia must not impose a digital services tax, or a similar tax, that discriminates against United States companies, either in law or in practice," the agreement reads in Article 3.1 Section 3 in ART.
Previously, Trump had threatened to impose additional tariffs on countries that continued to impose digital tax rules. He also threatened to restrict the export of US high-standard technology and chips to these countries.
This attitude is taken because the US considers the digital tax to give leeway to competing Chinese companies. Trump is committed to protecting companies such as Alphabet, Apple, and Amazon from regulations that he considers unfair in the global market.
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