UAE to impose VAT on online products and services
New rules that will be imposing VAT on online products and services, which are provided by offshore companies, are being drafted by Indonesia.
According to a recent report, this is in line with the authorities’ target of getting a bigger slice of the revenue from the country’s fast growing digital market. Indonesia is the world’s fourth most populous country with 260 million people. In a joint study by an American multinational tech company and an investment company in Singapore, the value of the country’s internet economy reached US$ 27 billion last year. More importantly, the study discovered that Indonesia’s internet economy is poised to grow to US$ 100 billion by 2025.
According to Mr John Hutagaol, who is a tax department official, while a global debate continued on how best to tax corporate income in this area, it was generally accepted that VAT, or in some cases sales tax, could be placed on digital goods and services. He added that in order to charge VAT, Indonesia, however, would need new implementation rules to decide on the mechanism.