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X, Spotify, other digital services see 12% VAT on fees
The fees for some digital services, primarily premium subscriptions, have been subject to a 12% VAT since Wednesday, when the new rate went into effect.
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President Prabowo Subianto (center left) and Finance Minister Sri Mulyani Indrawati (center right) address a press briefing at the Finance Ministry on Dec. 31, 2024, about the planned value added tax (VAT) rate hike. (BPMI Setpres/Muchlis Jr)
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ubscribers based in Indonesia have seen a hike in value-added tax (VAT) to 12 percent for certain digital services as of Wednesday, despite a year-end government announcement that the new VAT rate would not apply to digital services.
While direct online purchases for services made through providers’ websites or apps remain unaffected, Google Play transactions are also subject to the new tax rate.
For instance, subscribing to Spotify’s Premium Mini, which cost Rp 10,700 (69 US cents), is now Rp 11,984 after the new VAT rate came into effect on Wednesday.
Similarly, subscribers to CapCut Pro now pay a monthly fee of Rp 142,240 compared to Rp 127,000 previously, while the monthly fee for designing platform Canva has jumped by Rp 11,400 to Rp 106,400.
Even the Basic subscription plan for X Premium has also increased, and is now Rp 39,000 higher at Rp 364,000 per year.
Law No. 7/2021 on harmonization of tax regulations stipulates increasing the VAT rate to 12 percent on Jan. 1, 2025, but amid widespread backlash and in consideration of current economic conditions, the government announced at the eleventh hour that the new rate would not apply to all goods and services as initially planned.
At a press conference on Dec. 31, Finance Minister Sri Mulyani Indrawati said the new 12 percent VAT would apply only to luxury goods and services, such as private jets, yachts and luxury homes.
"That category is very small, limited, as stated, namely goods such as private jets, cruise ships, yachts, and [high-end] houses," she said, as quoted by Kompas.com.
"For other goods and services that have been subject to [the previous rate of] 11 percent, there is no increase in VAT to 12 percent, so it remains 11 percent," she said.
