New VAT on tech companies a big boost for Indonesian government

Published Sun, Oct 4, 2020 · 09:50 PM

Jakarta

INDONESIA'S move to levy a 10 per cent value-added tax (VAT) on tech companies operating within its jurisdiction is expected to boost the government's revenue collection in 2021 as its digital economy continues to grow at a rapid pace.

According to tax experts and analysts, the additional revenue collected from the VAT on tech companies could exceed 10 trillion rupiah (S$1 billion) a year, a welcome injection for the government as it faces a looming budget deficit on the back of a slowing economy.

The game changer has been the acceleration of online transactions of both goods and services driven by the Covid-19 pandemic.

Randy Jusuf, managing director of Google Indonesia, told The Business Times that Indonesia's digital economy is predicted to expand from US$40 billion …