ICT industry objects to proposed bandwidth tax
ICT industry objects to proposed bandwidth tax
The Jakarta Post, Jakarta
Internet and cellular telecommunication users could expect to
pay higher rates if the government goes ahead with a plan to tax
the utilization of bandwidth.
The plan is contained in a new draft of the tax law currently
at the House of Representatives, and has lead to industry
complaints that it would have to pay a double tax of up to 30
percent, having already been subjected to a 10 percent value
added tax (VAT).
"Businesses will likely pass the new burden on to consumers,"
said Internet Service Provider Association (APJII) representative
Sylvia W. Sumarlin recently.
Claiming an increase in fees would hamper the growth of the
information and communication technology (ICT) industry, several
associations have objected to the plan.
"With the new burden, ICT development would be slower. Last
year, the industry grew by 20 percent in terms of number of
businesses and the ICT penetration ratio," said Infocom Society
tax working group head Rudi Rusdiah.
Currently, Indonesia has a low ICT penetration ratio of 2
percent, meaning that only 4.4 million of 220 million Indonesians
have access to internet services.
Most other countries in the Asian region have reached at least
5 percent penetration.
"The use of bandwidth should not be taxed like a royalty, as
it only provides the connection access for internet users and is
not a technology," said Sylvia.
In the new draft of the tax law, the government plans to tax
income derived from the transfer of data using satellites,
optical cables and fiber optics.
The data is transferred through bandwidth, a term the ICT
industry uses to define a range within a band of wavelengths,
frequencies or energies.
This is a measure of how many megabytes of digital data can be
channeled. Currently, information and telecommunications
technology depends on satellites for the transfer of data.
APJII, along with other related industry associations, said
ICT companies were already paying a value added tax on the
bandwidth they used.
"Taxing the use of bandwidth is just like imposing a tax on
the use of satellites that are not even the government's," Sylvia
said.
Separately, the director general of post and
telecommunications at the Ministry of Communications and
Information, Basuki Yusuf Iskandar, said his office had not been
consulted when those sections of the new tax law that affect the
ICT industry were being drafted.
"I cannot comment on the effect (the law) would have, but as
far as I know my office was never formally or informally
consulted on the matter," he said.
The draft was drawn up mainly by the Ministry of Finance.