Indonesia among countries to be probed by US Trade Rep Office for adopting digital services tax

Bali, INDONESIA — Indonesia is listed as one of the countries to be investigated by the United States’ Trade Representative Office (USTR) for adopting digital services tax schemes.

Representative Robert Lighthizer said that US President Donald Trump “is concerned that many of our trading partners are adopting tax schemes designed to unfairly target our companies”.

“We are prepared to take all appropriate action to defend our businesses and workers against any such discrimination,” said Mr Lighthizer.

The investigation will look at any taxes that discriminate U.S. based companies or are unfairly retroactive and possibly unreasonable.

The USTR is said to have requested a meeting with each country’s trade representatives to consult on this matter.

It was earlier reported that the Indonesian Ministry of Finance will collect value-added tax (VAT) of 10 per cent for any purchase of digital products and services from traders or providers of Trade Through Electronic System (PMSE).

The announcement was made on 25 May. The new tax policy will come into effect on 1 Jul.

The digital services tax will apply to both foreign and domestic traders that reach a certain transaction value or amount of traffic and access within 12 months.

Netflix, a US-based company, is one of the online streaming services that will be affected by this policy.

Spotify and other online providers which have a significant presence in Indonesia are also affected.

The Indonesian government stated that those online services have taken economic advantage in the country and that they should be given the same treatment as conventional or digital products sold by domestic firms.