Indonesia adds Twitter, Zoom to tech companies that must pay 10% VAT

JAKARTA: Indonesia on Tuesday (Sep 8) added 12 more companies, including social media firm Twitter and video-conferencing site Zoom, to a list of internet-based businesses that must pay a 10 per cent value-added tax on sales.

In July Indonesia had already announced that Alphabet Inc’s Google Asia Pacific, Netflix and Facebook among other tech companies would be liable to VAT.

Governments globally are seeking to ensure that internet-based tech giants are paying their fair share of taxes. Indonesia’s moves come amid a shift to more online business with increased remote working during the coronavirus and as the pandemic has hit government finances.

Among companies named on Tuesday were business networking site LinkedIn Singapore, two units of Twitter, Skype Communications, Zoom Video Communications, antivirus provider McAfee Ireland, and Microsoft Ireland Operations.

The Indonesian tax office also put game developer Mojang AB, streaming platforms Novi Digital Entertainment and PCCW Vuclip (Singapore) on the list, as well as digital marketplaces Jingdong Indonesia Pertama and Shopee International Indonesia.

The companies must start charging VAT to advertisers and other customers from Oct 1.

The companies were not immediately available to comment.

Under rules introduced earlier this year, non-resident foreign firms that generate annual sales of at least 600 million rupiah (US$40,650) for digital products and services in Indonesia from at least 12,000 users are required to pay the VAT.

Indonesia, the world’s fourth most populous country with a population of nearly 270 million, is experiencing a boom in its digital economy which is expected to reach US$130 billion by 2025, a study by Google, Temasek Holdings and Bain & Company predicts.