Indonesia Unable to Collect Digital Taxes from Google and Netflix
Jakarta, CNBC Indonesia - The reciprocal trade agreement between Indonesia and the United States, outlined in the United States-Indonesia Agreement on Reciprocal Trade (ART), stipulates that the US is prohibited from imposing digital service taxes on companies such as Google and Netflix.
This provision, which prevents the US from imposing digital service taxes (DST) on Indonesia, is detailed in Chapter 3, Article 3.1 of the Indonesia-United States ART document.
“Indonesia will not impose a digital services tax, or any other similar tax, that discriminates against US companies, either legally or in practice,” as stated in the reciprocal trade agreement document, Thursday (26/2/2026).
The government believes that this agreement will not have a serious impact on state revenue, as it does not invalidate the collection of non-discriminatory value-added tax (VAT).
The Director-General of Economic and Fiscal Strategy (DJSEF), Febrio Nathan Kacaribu, emphasized that the digital tax agreement outlined in the ART differs from the digital tax currently collected in Indonesia through the Electronic System Trade (PMSE).
“PMSE is not a digital tax; the digital tax referred to in this agreement, and often debated globally, is the taxation of several hundred large technology companies, most of which are from the US,” he stated.
“And this discussion, as reported, is not as extensive as it seems. It is limited to a few dozen companies such as Google, Netflix, and others, and its impact on Indonesian tax revenue is very limited,” Febrio explained.
Therefore, he emphasized that the imposition of taxes on all companies, regardless of their country of origin, will continue because the nature of VAT collection is indeed non-discriminatory.
“So, PMSE will continue because it is non-discriminatory. Therefore, the VAT collected by the DJP on PMSE will continue,” said Febrio.
A similar statement was also made by the Director-General of Taxes (DJP) of the Ministry of Finance, Bimo Wijayanto. He said that the implication of all non-discriminatory tax policies is not aimed at business actors from a specific country.
“So, everything is set to be non-discriminatory and designed to be applied generally, objectively, with the same criteria. Therefore, from the DJP’s perspective, the taxation carried out is in accordance with the provisions of the applicable laws, such as VAT, which applies generally and without regard to business actors,” Bimo explained.
(arj/mij)