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JAKARTA (TheInsiderStories) – The Indonesian Finance Minister Sri Mulyani Indrawati has confirmed that after pressuring Google to settle its tax obligation, the government will continue to monitor other ‘over-the-top’ (OTT) companies for potential revenues, from the rapidly-growing information technology business.

“We will use the same principles for the companies that provide the same services to those of Google,” she said at the opening of the 7th Annual International Forum on Economic Development and Public Policy in Jakarta, Thursday (7/12).

She asserted that all companies, including information technology (IT) companies, whose source of income is from within Indonesia, are obliged to meet their tax obligations to the nation.

“If they also get the value-added profits, those will also be subject to taxation in Indonesia,” she said.

The Directorate General of Taxes of the Ministry of Finance previously confirmed US IT company Google has paid tax arrears for 2015. The type of tax payable is the income tax (PPh) and value-added tax (VAT).

However, the Directorate General of Taxes did not disclose the nominal amounts, due to a confidentiality agreement.

Currently, the Indonesian government is preparing regulations to increase taxes collected from online activities, and create a level playing field for local and foreign OTT providers. Foreign OTT providers will need at least a permanent establishment in Indonesia.

Foreign OTT providers must register before providing services, by submitting an Indonesian tax ID number, details of services, and a contact center. If a foreign OTT has established a foreign investment company in Indonesia, it must submit its principle license or permanent business license issued by the Indonesian Investment coordinating board.

The tax office will review documents submitted and issue proof of registration.

In OTT operations in Indonesia, certain activities must be conducted in Indonesia itself, including signing contracts, delivering services, and receiving payment for services. Hopefully, this will avoid disputes over where a transaction has occurred, and the Indonesian government will have the authority to collect taxes on online transactions.

The Indonesian government calls on all OTT players who earn income from the Indonesian market to consult their tax and legal advisers to structure their transactions to minimize negative impacts and maximize their operations in Indonesia.

Written by Elisa Valenta, email : elisa.valenta@theinsiderstories.com

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