Indonesia’s Ministry of Communications and Information Technology is exploring ways to tax digital advertising transactions by so-called over-the-top (OTT) internet players, such as Google, Facebook and Twitter.
IndoTelko reported Telecommunication and Informatics Technology Minister Rudiantara as saying: “We are coordinating with ministries and relevant agencies to implement a tax playing field for the global OTT players. They can do business here without worries, and the government can obtain tax from their activities.”
The minister said that the potential taxable transactions are from digital advertising, particularly through services such as Google’s AdSense, which serve text, video and interactive ads targeted to specific site content and audiences.
“When OTTs create a partnership or transact an advertising business with Indonesian partners and using rupiah, then it would be taxable. We will create a regulation for legal protection. The amount of levies is now being discussed. It can be imposed by the first quarter of 2016,” he said.
Last month at the ASEAN ICT Ministries meeting in Vietnam, Rudiantara call for ICT ministers in the region to “stand firm” against the global internet companies. He said if ASEAN has one voice, it can increase its bargaining power and be in a more balanced position to create a win-win solution between operators and OTTs, IndoTelko reported
According to the Indonesian Independent Committee of Telecommunications and Broadcasting, about 60 per cent of Indonesia’s content market share is foreign controlled, the portal said.
The Association of Indonesian Internet Service Providers estimates that the country contributes about IDR15 trillion ($1.08 billion) per year in revenue for the foreign content players, with Facebook accounting for $500 million, Twitter $120 million and LinkedIn $90 million.