Indonesia imposes 10% digital services tax

Indonesia has released details of its tax on digital services, revealing it will kick in on July 1st at a rate of 10 per cent. The nation flagged its digital services tax in April 2020 and, in a regulation [PDF] issued last week laid out a plan to impose a value-added tax on software, multimedia and data at a rate of 10 per …

[robidy]

Sadly with tech companies hiding behind the "we pay all tax owed", whilst using extensive and complex avoidance methods, what else do they expect.

Why can't they pay a fair amount of tax?

[Robert Grant]

Fair is only defined by the rules. Everything above that is charity, which is excellent, but generosity is not the same as fairness.

[BebopWeBop]

Yous seem to have a distorted view of the definition of fairness, at least as far as the majority of people see it. But lawful != fair.

[Anonymous Coward]

lawful

I don't see where custom tax exemptions are lawful. I've never heard where city/state politicians derive the authority to exempt very particular businesses from taxes. https://www.goodjobsfirst.org/amazon-tracker

[Anonymous Coward]

fair

Not by a long shot. They are not rules, that exempt individual businesses from paying taxes, that support civic structure they use, particularly civic structure and services that are exclusive to their sole benefit. And there is nothing fair, about that.

[LucreLout]

Why can't they pay a fair amount of tax?

They already do, it's just their definition of fair and yours differ.

While its deeply unpopular on the left, it remains that fair means different things to different people and absent a universally acceptable agreement on what fair is, those that favour high taxes will continue to think its unfair that those taxes get avoided, while people that favour low taxes and a smaller state will continue to avoid the taxes because they think the tax rate is unfairly high.

Taxes in the UK as a share of GDP are close to the highest they've ever been, so in terms of fairness, any zone of possible agreement is this level or below.

[ratfox]

So this is a VAT, and therefore technically paid by the end user... Though in practice companies sell at whatever price point which gives them the most total revenue, so it's likely they will lower their theoretical VAT-less price to compensate. It's easier to tax digital services, because the marginal cost of selling more is near-zero; meaning once you've produced the thing, there's almost no chance you will decide not to sell in Indonesia because you make less money there.

It's an interesting move. Seems a lot fairer and more efficient than taxes on turnover proposed by various EU countries; maybe because EU rules would not allow them to raise the VAT in this way?

[robidy]

Turnover tax for planning and forcasting is a known quantity so easy for business and authorities to manage and hard to avoid...making it unpopular with tech giants and Trump.

[ratfox]

The problem with a turnover tax is that it hits businesses so differently depending on their profit margin. If you take 10% of Google or Apple turnover, they'll hurt but still make money. If you take 10% of Amazon turnover, they'll have to close shop!... er... And that's a bad thing. Yeah.

[robidy]

Starbucks manage to survive here for years while making a loss.

A turnover tax makes "artificial losses" irrelevant and gives small margin business a clear know price model :)

[AmyInNH]

First off, it's not going to "hurt" Google, Amazon or Apple.

And specifically Amazon, their busiiness model from the start has been to "dump", sell below cost, to wipe out competitors, which is illegal, and has been subsidized, by tax exemptions (city/state property, city/state sales taxes), and public welfare subsidized non-living wage ware house employment. So, they balloon, and monopolize, at public expense.

Amazon closing, would be beneficial to the public.

[MiguelC]

Donald Trump and "handled very delicately" do not go together, is there even one example of the opposite?

[John Brown (no body)]

I would imagine that tiny hands would make delicate work more easy. Oh, not that kind of delicate?

[robidy]

They do it you want to keep your job for more than 3 months ;)

[Nifty]

I can predict that the UK will have 2 rates of consumer VAT, one for online and one for bricks and mortar based purchases. If the difference is only a couple of percent, the British will swallow it.

[Wibble]

Higher or lower for online v. bricks&mortar?

There's also the massive evasion of VAT and import duties on goods too; there's no way the cheap Chinese (and other origins) tat can be sold fairly and paying local taxes -- being sold through eBay, Amazon, etc.

[John Brown (no body)]

In many cases, the massively subsidised P&P (shipping) cost on orders from China are which swings it. If you can buy an item at more or less the same price from a local company or from China, but the local company charges 10 quid P&P while the Chinese company charges one quid, it's obvious what most people will choose. Few will worry about the extra delivery time, guarantee or consumer protection.

[LucreLout]

I can predict that the UK will have 2 rates of consumer VAT, one for online and one for bricks and mortar based purchases

Amazon would simply move the point of sale to collection from locker, and much of their problem goes away. For doorstep deliveries you're going to find it much easier to tax the courier than the digital firm.

Shooting the messenger with a blizzard of downvotes ain't gonna change the facts.