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Jakarta Post

Taxation bill allows government to ‘cut’ tech firms’ access

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PREMIUM
  /   Mon, February 24, 2020   /  07:48 am
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Illustration of video streaming service. (Shutterstock/Proxima Studio)

The government will be able to cut the internet access of foreign technology companies such as Netflix and Spotify, which are considered as having “significant presence and transactions”, if they do not pay local taxes, according to the omnibus bill on taxation. The sweeping bill will consider foreign e-commerce and digital companies with significant economic presence in the country, regardless of where they are based, as permanent establishments, and thus subject to local income and value-added tax (VAT). The “significant presence” will be determined by gross circulated product, sales and/or active users in Indonesia. The concept of significant economic presence falls under the first of two pillars in the OECD/G20 Inclusive Framework on BEPS (base erosion and profit shifting), which was developed by a working group that brings together more than 125 coun...